The oil is most likely leaking from the oil cooler seal. The oil cooler is the square aluminum piece that the oil filter screws onto. To replace the seal, remove the filter, remove both coolant hoses that attach to the cooler, remove the nut that secures the cooler to the block and slide the cooler off the tube. Replace the rubber o-ring seal which is available at the VW dealer. It's inexpensive. Replace everything in reverse order. Good luck
I've replaced several of these and found it easier (and less messy) to leave the coolant hoses on and remove the threaded shaft for the oil filter instead. To remove the threaded shaft you will need a nut that matches the oil filter threaded shaft . Believe it or not, this thread is an SAE (American) size thread, not metric! (The shaft is 3/4" diameter, I don't recall the pitch but I got mine from Fastenal).
First remove the oil filter. Then loosen the thin nut that sits between the oil cooler and the oil filter. Next, using the nut you bought, put it onto the end of the oil filter shaft and tighten this and the oil cooler nut against each other. Now use a socket on these nuts to loosen and rotate the shaft out. It should turn out easily after it's broken loose. When the shaft is removed you can push the oil cooler away from the mount and change the O-ring. (Some O-rings have locator tabs and some don't. Either will work but I prefer the one with tabs.) After the O-ring is replaced, put the shaft through the oil cooler and thread it into the housing until it bottoms. Don't tighten the shaft too hard into the housing, it's only aluminum. When the shaft is in and snug, loosen the two nuts you tightened against each other and remove the nut you bought. Push the oil cooler and seal up against the mount and tighten the oil cooler nut against the oil cooler. Replace your oil filter, start the engine and check for leaks.
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