The following is a guide to aid you into finding your issue with your lovely MKIII gauge cluster.

A few notes:

These directions are for a euro cluster, however, the diagnosis is still pretty much the same for all US clusters.
Common signs of a failed cluster are:

Intermittent operation of the speedo and tach needles, or jumping when the car is started.
A dead speedometer and a vibrating tachometer.
A speedometer that only works once the ambient temperature changes (hot or cold).
Flashing coolant light.
A fuel gauge that "swings" as the fuel level sloshes around inside the tank.

If your cluster shows any signs of these problems, you can be sure that the cluster itself is defective and needs to be serviced.

A few things to check,
1 - make sure the grounds are good out by the engine block.
2 - Double check all connections on the back of the cluster connector.
3 - Verify that the VSS (speed sensor) is hooked up and functioning (on the transmission)

To remove the cluster see this link;

Clusters can be repaired and mileage reset by sending them out to a3clusters(at)