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Hi Everyone,
This is my first post to the forum. I've always wanted a MK1 Rabbit, and in August found myself in Colorado where someone was selling a (structurally) rust free 1979 mk1 with a 1.5 diesel. I bought the car and was able to drive it back from Colorado to college in Ithaca NY with a buddy, holy sh*t it was quite the trip.

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The last photo is be fixing the accelerator pedal after the cable to pedal bushing crumbled while I was getting on the highway in Colorado.

I plan to totally restore the entire car. I've got parts for:
Totally fresh front suspension/steering system including new bushings, control arms, ball-joints etc.
Front and rear break overhaul
New floor pans (the only rust part of the car)
CV joint kits with new boots
Total engine rebuild kit for PartsPlace, this is the "intro" kit so no new pistons, just rings, bearings, seals, valves, and ARP head studs
All new motor and transmission mounts
Exhaust rebuild kit
New wheels and tires
New clutch kit, transmission seals, throw-out bearings, and shift linkage bushing kit
Soon to come are coilovers to lower the thing and way way down the link I fully restore the body and paint it

Most of this stuff is only getting changed because it's so easy with the engine out, which brings me to the ACTUAL problem with the car, the engine. A list of symptoms is given below:
  • When I first drove the car after purchasing it, it was warm and fired right up. The next day, and every day after, (from cold) the car wanted to kick over but just couldn't get there. The only way I could get it to start was plugging the block heater in for about two hours, letting it come up to temperature, and then it would fire up like normal. Recall, this is August, so it certainly wasn't cold, just not engine temp hot.
  • The car burns oil like crazy, to the point where every time I'd stop for gas I'd put about a quart of oil in. The engine noticeable smokes as well from oil seeping out of the engine onto the hot block. Temp never went above ~192F though, so it wasn't running especially hot, and wasn't burning coolant, just oil.
  • I can see oil bubbling from the interface of the head and block to the point that it pools on the block (I wonder what that could be)
  • The air intake box is filled with oil
  • There is a small amount of sediment in the coolant reservoir from coolant and oil mixing
  • (Big one) A virtual total loss of power to the point where by the time I got to PA, I had to do about 20 mph in 2nd gear to go up any hill on the highway. Starting at a light on a hill requires me to almost max out the revs before dropping the clutch otherwise the car stalls. I did crack the injector lines and there was fuel getting to the cylinders.
  • After I pulled the engine, and turned it over by hand at the crank, I could hear the cylinder pressure leaking down, I checked compression on cylinders 3 and 4 (the two farthest from the injector pump) which also happens to be the corner where I can see the head gasket bubbling, and my HF gauge read 0 PSI... Didn't check the other two because the hoist chain was in the way and I figured the gauge was just fu**ed. I did however depress the gauge relief valve later and it let off some pressure, so maybe it really was like sub 50 PSI cylinder pressure
  • Also pretty crappy mileage
All these symptoms lead me to believe that I have either broken/tired rings and or worn cylinders leading to low compression and excessive blow-by which would explain the burning oil. Additionally the problem is exacerbated by the severely leaking head, only further worsening the whole compression problem. The total lack of compression means no power is being produced out of my already 45 HP engine, which explains the whole 20 mph max speed on a hill thing. The fact that block heater fixed thing, maybe as things expanded, fits between different components tightened up, and there was now just enough compression to start.
I guess I'm wondering if everyone here who knows way more than I do agrees with my diagnoses, and hopefully I'm not trying to rebuild something that is totally f**ked for a different reason beyond my ability to fix. I have access to a full machine shop at school, and have hundreds of hours running Haas CNCs, toolroom lathes, and even surface and cylindrical grinders, so mic-ing the bearing surfaces in the engine and measuring cylinders should be no problem. Additionally measuring head and block flatness won't be too big of a deal. I only wanna drive the car stock for a couple of years before I potentially make it fast, so rebuilding the 1.5 seemed like the best option for now.

I also have a single cylinder head bolt that must be totally seized because I broke a breaker bar trying to get it off. Then after nightly PB Blaster soaking for a week, and plug-in electric impact gun still wont take it off. I'm wondering if the best approach is heating or drilling/cutting. I'm worried if I locally heat the head, the thermal mass of the head will soak most of the heat and won't actually help the seized threads, or I'll have to heat it so much that I'll end up distorting close fitting bores in the head, or distorting the head to block mating surface. Drilling seems like it'll be a crazy nightmare because the fastener is so strong, it'll probably burn up 100 drills, and grinding seems impossible because the region around the bolt is so tight. I'm also worried that IF I get the head off, the fastener is equally as seized but without any drive to try and turn it out by. This is probably unlikely, and if the block is removed I'll be able to apply heat right at the threads and maybe just cut two flats and turn it off with a wrench. Just looking for some input from the crowd before I mess my engine up.

Thanks for reading this memoir of a post, appreciate all the help.
 

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I would say apply heat from a heat gun....then try the impact.
Pray the previous folks didn't use a 12mm head bolt in the 11mm head. Other wise talk to a Machine Shop guy, and get his take on it. I had a similar issue once, and the Head bolt broke off... Not on a Diesel, but on an aluminum block English Rover 3500. After I got the head off I could get a pair of Vice grips low on the stud, I used a washer as a guard against scratching the surface of the block, and With a pair of vice Grips I could tap the stud with a hammer until it move, and I mean tap tap tap not smack..... once it moved then I use Kroil (don't remember PB-Blaster use in those days...let it sit for a hour... then Tap tap Tap once it freed up I could then spin it out by hand.

last course of action is Sawing it flush and Drilling it out with Left hand drill bits and a reversible drill in reverse. Start out Center dead center, then use a Variety of small to large sizes and only try to drill 1/2 the way... Might surprise you, read up or visit You-Tube on using left handed bits.

Worst case is your swap is going to occur sooner than later, and I would suspect that IP timing, and or weak glow plugs cause your issues.
 

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ps I moved this to the General Oldy Rabbit forum...where you may get better answers quicker.
 

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The 1.5 motors were prone to having the blocks crack. You will have a better time finding a replacement 1.6 motor than mucking around with the 1.5. If you just need a running car you could always swap a 1.8L or 2.0 gas motor in from a later model vehicle.
 
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