All engine faults/repairs/maintenance Dashboard water level and temperature warnings and causes
The flashing indicator LED in the dash pod comes on under three conditions:
On start up as a self-test, when it flashes for around 10seconds On low water level in the main coolant expansion tank. This warning will only be cancelled by shutting down the engine and restarting. There is a sensor on this that occasionally can jam, causing the dash to continue to show a low water level warning after being topped up and re-started. On high temperature. If the gauge exceeds a certain point the flashing warning light will come on. When this condition has been resolved the light will stop flashing.
If the gauge is reading a permanently low-low condition this indicates a lack of signal. Check your sensor connectors and then the sensors themselves. On diesels the water temperature sensors are on the water housing in the middle of the head as you look down into the engine bay. This has outlets to the expansion tank and the oil filter-mounted oil cooler (where fitted).
The cuircuit board under the dash pod can get corroded (sometimes badly from windscreen corrosion badly fitting seal) co I think they get fed from there, pry off dash pod. And trace the white plastic block that feeds it, disconect it and buff up the copper contacts with a green scouring pad can also fix disco lighting effects on the dash warning lights.
see also VW Electrics bad earths