OK, on testing the regulator...do you have a Haynes or VW shop manual? If so, it'll help in picturing the arrangement of parts.
Here's a link to a set of schematic diagrams...
http://66.34.72.138/index.html
Scroll down to the "Type 4" area and pick your vehicle.
Hang on, this is long, apologies in advance. Read it through a few times, and ask any questions you have.
You'll need a voltmeter, two test leads, and a turn signal lamp with leads on it if you have to go through the whole procedure. Use normal safety precautions, and be sure to disconnect the battery completely when charging, or working on the hot lead.
Usually, one breaks the alternator plus battery terminal and inserts an ammeter to see if the alternator is putting anything out. Since the alternator plus battery lead connects to the starter solenoid battery terminal, and is not accessible anywhere else closer to the alternator, to really test the alternator in the T4 config, you need some way to break the battery plus lead at the battery, and hook in an ammeter while the engine's running (can't put the usual test ammeter in and subject it to starting motor draw), WITHOUT OPENING THE LINE TO THE ALTERNATOR (thus destroying the alternator diodes from high voltage or maybe causing a transient that destroys the EFI computer)...a tall order. I've been doing cars for 30 years and have never seen one of those switches in person, though the Haynes manual references one, and I've heard of folks that have one. There's another way to infer the health of the alternator without breaking the connection.
First, the regulator on the T4 is fed +12V for exciting the field from the alternator itself, from a second set of positive diodes called the exciter trio. In effect, the exciter trio completes its circuit through the main negative diode trio, so by confirming voltage on the exciter line, you're confirming a good exciter trio and negative trio, plus a good rotor, stator, and brush set. The alternator lamp does just that when it goes out after the engine's started, assuming it lit in the first place, since it's fed from the exciter trio on one side, and +12V from the battery (through the ignition switch) on the other. Read on for details.
So, first thing, DISCONNECT THE BATTERY COMPLETELY (needed to prevent transients affecting the EFI computer) and recharge it. When it reads something like normal, say 13.5V, disconnect the charger. Go under the car and make sure the battery positive at the starter solenoid (same place it is on a T3/T1) is tight. If that connection were loose, you'd get poor charging due to the voltage drop, since it's shared with the alternator. Clean the positive and negative terminals on the battery, and the clamps.
Connect the battery positive, then the negative, then check system voltage at the battery. If it's 12.5-13.0 with no load, turn the ignition to the "run" position (not "start" yet) and see if the alternator lamp lights.
If the lamp does not light, you've got a lamp, wiring, or alternator field circuit problem, and that needs to be fixed before proceeding. The lamp is lit when +12V from the battery is on one side with the ignition switch "on", and the other side is effectively grounded through the alternator rotor (field) winding. The small current flow through the lamp is needed to provide a very small magnetic field to start the alternator working, as well as letting you know if the circuit's OK. Start at the regulator. With the ignition switch "on", check for voltage on the brown wire (D-) at the regulator, with the connector still plugged in. It should be at ground potential, and read zero or very, very close to zero. If it reads more than say 0.02 Volt, you've got a poor ground. Try cleaning and retightening the regulator ground screws (the field grounds through the regulator case and that brown wire). If that doesn't make the lamp light, then it's possible you've either got lamp or lamp wiring problems, a regulator with a connection opened up inside, or an alternator field problem. To test the wiring, turn off the ignition, disconnect the regulator three-prong plug, and ground the terminal on the socket that has a blue wire and a red wire going to it. Turn on the ignition switch, and if the lamp's not lit, you have a lamp or lamp wiring issue. Start by checking the bulb (to do that, you have to remove the clock, two knurled nuts on the rear and it comes out). If the lamp tests open (ohmmeter test), any of the other indicator lamps that still lights will work in its place. If the lamp is OK, it's a wiring issue somewhere between the lamp and the regulator. When you get the lamp to light with the jumper to ground at the regulator, pull the jumper and reconnect the regulator (with ignition "off"!), and try it again.
Assuming you got the alternator lamp to light, proceed with voltage testing. Connect your voltmeter to the ignition coil "+" lead (black, goes to terminal 15) to read system voltage while you're in the engine bay. Start the engine, and go back and check the voltage. If it reads 12.8V and slowly increasing, great. Watch it for a while, and after 5-10 minutes (if things are working OK) it should top out around 13.8V (the Haynes manual says 14V, BTW). If it does, try turning on the lights to see if the voltage stays relatively constant (a constant drop of 0.1V or so under load is no problem). If it stays constant, you should be OK. If not, you may still have a regulator or alternator problem. If the alternator lamp is still lit even after the engine is started, that's a good secondary sign of problems.
Bypass the regulator next and see if the alternator produces juice when energized from another source. To limit the max output (and avoid frying sensitive components in the EFI), limit the current flowing to the alternator field (and therefore alternator output) by using a #1134 turn signal lamp (single filament) as a dropping resistor. Pull the regulator connector, and connect the turn signal lamp (shell to one side, tip to the other) between the ignition coil "+" terminal (black wire) and the regulator connector's green wire (DF). Ground the regulator's brown wire to complete the circuit. Turn on the headlamps (to provide a load in case the alternator is especially frisky), start the engine, and check system voltage. If it's now above 12.5V and rising, stop the engine and replace the regulator. If it's above 14V, stop the engine IMMEDIATELY and replace the regulator

(you've got a frisky alternator!). If it's below 12.5V and dropping, first turn off the headlights and see if it starts rising, if so the alternator is most likely OK, but you should have it bench-tested anyway to be sure it's not got a weak diode

. If turning off the headlights did not cause the voltage to start rising, you need to pull the alternator and replace it
