<<Anyway, when the shop welded the pannel back in place they spot welded
it before painting. Right now it looks great, but I can't help thinking
the water is just going to get under there again. Should this seam be
welded all the way across?>>

It was spot welded from the factory.
If the folks who assembled used a weld through primer as VW did on the
seam it shouldn't rust.

You'll have to research how they went about the repair.

No weld through primer, I'd have to say it's going show a rusty seam
pretty fast.

If they had glued the panel together with 3-M body panel adhesive
instead of welding it, you wouldn't have to worry about it ever rusting.
I displaces moisture at the repaired joint's.