rich, this sounds a lot like what my beetle was doing last fall. noises included a clunk on pressing the clutch pedal, followed by a grind as i tried to get it into gear. turned out all i needed was to adjust the clutch. it'd been a while since it was adjusted, and had backed off waaaay too much -- so much so that the cable channel had been the only thing holding that last little bit of clutch adjuster in. when the metal channel came loose (what was making the clunk noise), i got a simultaneous clunk/grind.
if this is your first ACVW, pick up John Muir's The Complete Idiot's Guide to Keeping Your Volkswagen Alive. this isn't a statement on your mechanic skills, just that the book is pretty good for diagnosing those quirky hiccups with your aircooled.
