Clutches go out in several ways, and yes, they can go suddenly.  The
old VW clutches were cable-operated, and you were not tempted to
assume the hydraulic system was at fault.  There are two other likely
problems to check -- the throwout bearing and the pressure plate.  If
either is bad, they are probably both toast.

The throwout bearing sometimes fail, and they do so rather dramatically,
shedding bits all over the bellhousing.  The pressure plate has numerous
steel "fingers" that the bearing rides on.  These can wear as well, and
the death of the clutch is sudden when they finally fail.  Either one
will typically damage the other.

Clutches on this beast are not _too_ hard to get to -- just plop the tranny
out (leave the engine in place).

Check the pressure plate, throwout bearing, disk and flywheel surface.
If anything is bad, you should probably replace all but the flywheel,
and replace the flywheel if it is scored (they wear into a "wavy"
concentric pattern -- this is normal -- deep or sharp grooves are not,
nor is any galling or chatter-damage).

Without removing the tranny, you might find out that the throwout bearing
and pressure plate are toast -- simply remove the slave cylinder and
move the actuator arm by hand -- it should move smoothly, but not much.
I suspect that yours will move past where it should.

Good luck.  Mine failed this summer in the depth of the Ozarks -- blistering
heat.  Failed on a Friday afternoon, to boot.  I fixed mine in a motel
parking lot -- dropped the tranny, replaced the clutch, and popped the
tranny back in -- about 6 hours total, but it could have been faster if I
had a clutch-alignment tool.  I had to try a couple of times to get the
clutch centered properly, each time dropping the transmission again.

Malcolm H.