Attach a DVOM to the lead on the O2, not the white leads they're for
heating the element,  Use a propane torch to heat the sensor and look
for voltage.  The unit should be able to generate 1 volt.  Incidently, I
feel that some O2 just get fouled, by soot , the propane will clean the
sensor and usually  the sensor can be reused.  Really they're quite a
durable item, but they do fail.  Test with the propane and confirm.
 Like Dennis says, there is usually something else to cause it.

I hear what your saying is that you have engine that has who knows what
done to it to make it run and you'd like to get back to a baseline.
 Well a genuine VW temp II sensor is a must, as well as a thermostat.
 as I mentioned I've written thourough procedures on how to tune from
step one.

Sincerely,

Mark Keller
91 Carat