how to set engine timing

Get a Haynes manual for this.

I agree, get a manual. Be sure that when you set the idle and the timing that the motor well warmed up. First while the engine is cold, be sure the valves and the points (if you have them) are adjusted properly. Be sure the spark plugs are correctly gapped and tightened in the head and that all the plug wires are properly seated. Be sure all vacuum hoses are correctly in place and that the hoses are in good shape and not cracked. Be sure all the fuel injection electrical connections are hooked up correctly. Warm it up by driving around the block a few times then set the idle and then the timing. When you get the manual you'll see that there's a figure to set the timing while the engine is at idle, do that first, then you'll notice that there will be a setting at somewhere around 3000-4000 rpm. Get that set using the instructions in the manual and you should be fine. If you're not, start looking at things logically - do you have the correct amount of air, fuel and spark for the motor to run? Troubleshoot from there. Haynes makes a good manual, but if you can find an official VW repair manual or a Bentley - they are the most helpful. I believe that John Muir makes an idiot book for your car, but like I said go for the Bentley or VW manual. Good Luck! Nick