Headgasket going?

Pretty high if you've overheated it bad enough. A compression and/or leakdown test will tell you for sure.

FWIW I just sold my 200K mile mk2 GTI 8V, same RV engine except Digifant 1 (california). Only smoke I had in the morning was a big puff of blue for about 5 seconds, to be expected of a car this age. The only coolant leaks I had was the coolant flanges (as you noted w/yours) and earlier this year I had a leaking radiator. My radiator was leaking slowly for a long time with no visible puddles where it'd drop about 6 ounces over a couple weeks. Towards the end though it'd dribble enough after being parked at work for 8 hours though. So what I'm saying is a slowly leaking radiator might not be obvious for a while but still will cause the level to drop. Got a new radiator for about $70 online (I forget where though but shop around...I've seen prices on them vary quite a bit) and swapped it in in about 2 hours by myself. Takes some wiggling to get the old one out and the new one in w/o bending any fins and w/o dismantling too much of the car but it can be done.

True but he didn't say it overheated...he said it's actually not overheating.