So I fill the empty resrvoir (the main one you fill behind the license 
plate
) with water to start with (thinking I'll add coolant next batch as the
water circulates).

You should have added coolant to the main reservoir, the one with the 
pressure relief cap that has a hose leading to the tank behind the license 
plate. Whenever the tank behind the license plate runs dry, you have to 
begin by filling the main reservoir. Most likely, you don't have your 
cooling system anywhere near full of coolant.

Coolant starts to run out of the radiator valve bleed
nut (a bit bubbly but seems to subside), but no water which I added to the
reservoir moves at all... and the temp still continues to rise rapidly.

That's because the tank that you added coolant to is an expansion tank. 
When the engine gets hot, coolant expands through a pressure relief valve 
on the main tank into the expansion tank. When the engine cools off, 
coolant contracts, and coolant is sucked back into the main tank from the 
expansion tank.

Start over and do it by the book, exactly by the book. In synopsis, raise 
the front end the required amount, open both heater valves, open the 
bleeder valve on the thermostat housing, open the bleeder valve on the 
radiator, rev to 2000 (or is it 2500 I forget), and pour a 50/50 mix of 
coolant and water into the main tank while holding rpm at 2000 (or whatever 
spec is). Keep adding coolant until it won't take any more. Anyway, that's 
a synopsis off the top of my head. Read the book and follow the 
instructions. It's a bit daunting, but not really that bad. Messy though.

Damn VW sure made filling coolant a bitch.. do you have to go throuigh all
this bleed valve stuff when your topping off coolant on an average day (in
other words when you haven't blown a hose or something)?

No, you only have to bleed the system when you lose a bunch of coolant and 
empty the main tank.

-Mark McCulley

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