I stand corrected. The Manual for my 87 says:

When the knob is pulled or pushed, engagement or disengagement is only
initiated. The actual locking of the differential can be delayed if the
wheels are rotating at substantially different speeds. When driving around
a corner it could also happen that the lock will not engage or disengage.
Under such conditions slow down and drive in a straight-ahead direction so
that the lock may engage or disengage.
The warning light above the knob indicates the operational condition of the
lock:
- The light comes on only when the lock has engaged properly.
- The light goes out again once the knob has been pushed in and the lock
has actually disengaged. If the warning light does not light up, after
selecting the differential lock, and after an extended drive, the
electrical system and the lock should be checked by your VW dealer.

WARNING!
Never lock the differential when...
� driving on paved roads. When the differential is locked, the rigid
connection between the rear wheels has a rubbing effect on the tire when
cornering. This leads to increased tires wear and also to �jerking motion�
when the vehicle is being steered. The differential lock for the rear axle
must only be used when the vehicle is stuck or is in immediate danger of
becoming stuck.
- one wheel is spinning. First bring the spinning wheel to a standstill,
and only then engage the differential. This prevents damage to the drive
train or uncontrollable acceleration leading to loss of control and
personal injury.

Michael J Vickey
vickrail@velocity.net