So, continue rebuilding the motor.  Some things that had fit well on the 1.8L  fit oddly on the 2L.  For example, I had to change the angle of the bottom power steering pump bracket were it  bolts to the block oil pan flange, as well as filing out the hole where the main bracket bolts to the power steering pump bracket.  All in all though, everything goes back together pretty smoothly.  Most questions you will asked will be answered by the manual.  Be sure to correctly torque all nuts and bolts according to the specs listed.  I have some more pictures coming to show the other clearance areas.
   While you have the motor out, it is the best time to replace all the shift linkage you can get to.  The complete rebuild kit includes parts you can't replace unless you take off the exhaust system.  So, when you order the shift linkage rebuild kit, just tell them you want all the stuff you need to replace the parts in the engine compartment.  These are the parts that also wear the most.
   The same hold true for the rack and pinion boots and tie rods.  Get the high quality tie rod removal tool with the C-shaped inserts as opposed to the cheapo one with the bolt to tighten.  Cut off the old boots, remove the old tie rod ends, and the tie rods.  Try to duplicate the length of the tie rods with the old rods, looking at the clean threads to note how far on the old ends were screwed on.  Re-insert the new tie rods and boots using thread locker and tightening it down tightly.  Remember this is your STEERING!  Do it right.  For the clamps on the boots, it turns out you can use high quality nylon ties.  I felt very strongly about using the stock clamps, or at least that style, but the whole thing was very difficlult to do, and the boots already have ribs they snap onto.  The ties just keep them tight.
    While all the stuff is out of your car, and if you have as many miles as I did, it is also time to do the control arm bushings.  These have to be pressed out and in by someone with a press.  I was able to do my own front ones using a pulley puller, but the rear ones are impossible, just have someone do it.  My rear bushings were both ripped which leads to a lot loosness in the front end.  The bushings themselves are not that expensive and neither is the pressing, so just do it.  Then, when you have the alignment done, everything is new.
   The distributor is another area where things aren't the same.  You will need to drill out the pin that holds the distributor drive gear to the shaft of the 2L distributor.  Take care not to damage this, the larger gear as you will be putting on this on your 1.8L distributor.  Once you have drilled out at least half of the pin, you might be able to pound it out with a punch and hammer.  The same goes for the 1.8L gear.  I tried VERY hard to just pound out the pins, but they are seriously in there.  Once you have drilled and punched out the pins, the gears are still very tight on the shafts.  I had to heat up the gear with a torch then tap it off with wood and a hammer.  Use the pin supplied with the sealing spacer to finish the gear swap.
   Another difference is the rubber valve cover gasket.  Be sure to remove the stock cover studs and replace them with the supplied studs as the flange on the stock studs will impeed the gasket's sealing.
   You should replace the O-rings on the A/C fittings that you have to undo.  You can order them from Volkswagen.
   
   With my rebuild I had to get a new head due to there being a crack between the valves on the #1 cylinder.  According to the manual, you can re-use heads with small cracks in them.  I didn't feel comfortable with a cracked head, and because I was going for a new car, I got a new head.  If you go with a new head, keep in mind there will be a terrible amount of noise when the motor is started, as the lifters get filled up with oil.   I would turn over the motor for 2 min. at 30 sec. intervals with the coil disconnected.  Be sure you have plenty of oil in the motor as well as pre-filling the filter so the motor doesn't have to turn over dry for very long.
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Parts Sources:

Velocity Sport Tuning (the majority of my parts were purchased here)
Jeff Moss
310-952-0003

Techtonics Tuning (the block off plate and sealing distributor spacer)
503-843-2700

BW Auto Dismantlers (the block)
Jeff
800-327-0888

Kraftswerk (the tranny)
Sean
714-901-5055
This is Sean from Kraftswerks turbo 16V motor.  He broke an alternator bracket on his first run, but is now fabbing up a custom one for all you that need a low mount alternator for your turbo motors.  This is how far I could go, but I'm not going to spend any more money on performance parts unless I might need an adjustable cam gear.