While I am waiting for an bolt of inspiration that will loose the stuck nut that hinders my progress on removing the right rear wheel, I decided to work on something else, knowing that there are others things to work on and hoping that progress there would raise my gumption level and break the impasse that stalled me for a week or more.
Although I don't intend to rebuild the engine, I find that term 'rebuild' to be a bit flexible. That is, because I have removed the engine, there are many parts of it that I will remove, clean, repair, sand, paint and replace as part of the overall refurbishment. These are things like the alternator and fan, the 'doghouse' shroud that holds that fan and covers the oil cooler, the carburetor, the intake manifold and the alternator pulley.
None of these things need to be replaced, just cleaned, painted and reassembled. The engine has, from the beginning, looked to be in very good shape, and when I got all that stuff off my hopes were buoyed, if not actually confirmed. The oil that I (finally) drained from the crankcase was dirty but not contaminated with any metal that I could feel. For some reason, I have yet to conduct one of the easiest and most basic tests of an engine's condition, the spark plugs. I'll have to do this tonight.
Once I had all the dirty (but not rusty or even bent) shrouding removed and buffed the dirt off the head covers, I discovered a little tag that says "Made in the Netherlands". I am not sure if this means the whole engine, or just the head cover, but it's an interesting discovery. At this point I stopped and put the engine aside, but before I put it back together, I will consider removing and/or changing the heads. I plan to put in dual carbs, so it may be that some new (or rebuilt) heads would improve the engine performance enough to make it worthwhile. I'll 'save' that for later.
The next task I turned to was removing the driveaxles. This job required buying a(nother) new tool--which came as part of a set of three--to remove the bolts that connect the two ends of the driveaxle. The driveaxle connects the transmission to the wheels, and removing it is the next-to-last step in the tear-down process. When the body is still on the frame, this in one of the hardest to reach and dirtiest places on the car, but as it stands now, it's very easy to reach.
These bolts are still plenty dirty, though, and to make use of the tool without stripping out them out, I had to make sure all the little splines were cleaned out thoroughly. These bolts are unique to VW's, and are apparently still in use on today's cars, so you won't find the tools to remove them at Home Depot, or even Freight Harbor. I had to order them online. It was certainly worth the expense and the wait because it really does fit at both ends: into the bolt heads and on my ratchet. It was a little scary, at first, using it. It felt as if it was going to strip like aluminum, but a little extra leverage was all it took. In no more than ten minutes, all twelve bolts and the driveaxle were out. Although this was dirty, it doesn't appear to be damaged or rusted, so it's likely that a simple clean and re-grease is all these parts will need.
After both of the driveaxles are out, I can remove the transmission. Like the engine, it looks to be in pretty good shape. I'll have to drain the fluid and see if there is any metal in it, and decide from there whether or not I'm going to replace it. This is another decision to be made down the road, so to speak.
Next I will turn my attention to removing the diagonal swing arms, which connect the wheel bearings to the frame of the car. This is more heavy metal work and may even require one more special tool, but it will be the last (major) part to come off the car. There are still a number of pieces to come off the frame before it can be cleaned, sanded and painted, so I can't say that the teardown is at an end, but I am getting close!
With the trailing arms out and off to the machine shop to receive their new bushings, it was time to pull out the transmission. I like the British term for this piece better--gearbox--because it sounds racier I guess, but by either name it had to come off the frame for cleaning and inspection. 
This is not a difficult job--unless the body and engine are still attached, and even then it's fairly straightforward. It's attached in just three places, so it was a simple matter to unbolt it and lift it off the frame. I set up a hydraulic jack underneath just in case, but as it's made of aluminum, after the bolts were out and the shift rod was detached, I was able to simply pull it out and set it off the the side. 
The gearbox is dirty but looks to be in good shape. Although it had a fair amount of crud built up, particularly around the driveaxle connections, it doesn't appear to have been leaking, at least not too much. The layer of crud is either a bit of grease that oozed from the front seal and has been collecting dirt for thirty-seven years or is just mud and dirt built up in those places you expect it to. The 'guts' of the gearbox are relatively hard to wear out, so when I check the fluid if it's free of contaminants (especially metal) I will assume that it is ok and just clean it up before putting it back in. Of course, if there are metal flakes in the fluid, it will be time for a trip to the junkyard.
Speaking of the junkyard, I took the trailing arms in to Austin V-Dub last week to have the bushings replaced and it was a lot more expensive than I thought it would be. The guy just called to tell me that they are ready and the total came to over $650. Now, to be fair, $250 of that is actually for the front ball joints, which are being replaced as well. Although the $400 for the rear trailing arm bushings is a lot of money, I really don't have any choice. For one thing, the bushings are no longer common, and of course replacing them is no longer a routine machine shop chore. Fortunately the guy at Austin V-Dub is older and knows what he is doing, which is--of course--a lot more than I can say for myself.
While waiting to save up the money to get my heavy metal parts our of hock next week, I turned my attention to the front beam. Although I had not intended to pull this off originally, after the work I've done on the rear it seemed like the consistent--if not easiest--thing to do was to pull it off, clean and repaint it. Just four bolts hold it on, and in just a few minutes my decision proved to be worth it, for the rust and grime I discovered was considerable and I'll feel a lot better about it knowing it's clean and tidy under there, even if no one will ever see it except for me. This task also meant that my dirty days are not over, as the broken and rusted lower torsion springs left quite a gritty mess inside the tube. That stuff had to come out, and all the surface grime and rust had to be whisked off the frame with the wire wheel. Then I primed and painted the beam, but since I didn't clean up the mounting bracket on the frame, I will have to wait to put it back on this weekend.
