'82 rabbit cab: ran fine until...

a couple weekends back, i was getting ready for waterfest 18. the Friday before i decided it would be a good idea to wax the rabbit and clean up the engine bay some.

now i can already hear the questions being asked, but i'll answer what i can/know how to:
i used the engine cleaner/degreaser (first mistake) with the engine off, as per the instructions. once hosed down (second mistake), i started the car and let it idle, as to warm up and steam the water away.
ok, no problems, yet…

after about 5-8 minutes of the engine running, i notice the underside of the hood was a bit dirty (i was drying the car after the wash, letting the car run while i dried it) so i sprayed the underside of the hood with a quick spray on the "shower" setting of the hose nossle. (engine is still running at this point, i thought nothing of it, yet another mistake)

immediately after i did this, the engine began to sputter… a few tugs on the throttle cable later it evened out and continued to run as per usual. all of the sudden, as i'm wiping down the vacuum relay for the a/c intake vent, it shuts off.

now, the first thing i check is the fuse box. no blown fuses. OK, next i checked wiring in the bay. couple of wet/moist plugs. i disconnect them and let them dry out (i also dried out the rotor cap, it had accumulated some water from the steam i guess)

now when i try to start the motor, it cranks, but does not run.

i searched the engine bay some, and found 3 things that may also cause an issue: one was a set of wires on a female plug on the passenger side of the bay, which my bently manual tells me is an O2 sensor check wire? another is a sheathed pair of wires in the firewall that is currently routed on top of the intake plenum and zip-tied, unconnected, to the plenum vacuum tube. its a brown/white with a female spade and a solid brown (if i remember correctly) that has no connection and is wrapped in electrical tape. the third is at the bottom of the air-box. there apparently is a hose that should connect somewhere, but its been ripped off, and is just an open hole now. not too sure what that's about.

some history for this car: we are the 4th owner, my dad bought this from his mother back in '03. it was a mess back then, but it ran. it had been a tow-behind car while they owned it. they traveled the country in an RV, and once at location, they unbolted it from the back and drive it around. once we took possession of it, my dad and i rebuilt the motor. (and by that i mean he rebuilt it, and i helped with what i could understand, being ~15 and having little interest in cars beyond looks).
the motor itself was in poor condition: remove a broken part and 3 more below it were broken/breaking condition, it seemed. thus far this car has been nothing but trouble, leaving him stranded on the road 10 times, and myself stranded twice. we've all but given up on trying to fix it, however i'm trying to get it to a good and running (reliably, at that) car to replace my current gas-guzzler of a truck ('04 Envoy).

any help would be appreciated, and please, if there's something i missed/am missing, don't hesitate to tell me. i really want this car to run.

*edit*
forgot to say its a manual with the 8v gas engine.

you might get better help on the vwvortex for this particular engine, as we didnt get them over here! but first thing is make sure you get a good spark to the plugs, and check the air filter is ok maybe it sucked in a lot of water?

you guys didn't have the 8 valve gas engines? holy cow… well i learn something new every day i guess…
i've been looking over the engine, and to answer your suggestions:
checked spark, it makes it to the rotor cap, as well as all 4 plugs, strong spark.
air filter is clean (should i say, was cleaned recently, though i checked it again to be sure)
and i'm not sure how it could have sucked in water, unless maybe i have a hole on the intake manifold somewhere? (like the gasket, though i find that unlikely. the motor has less than 10K miles on it, post rebuild)

i have a few pictures ill upload when i get home (about to drive home from work) they address the wires and airbox hole i mentioned in my initial post.

also, thank you rubjohnny for answering. its nice to see someone is out there to help those of us in need


*edit*

Pics:
what i believe to be the o2 sensor checking wire
http://i566.photobucket.com/albums/ss104/DolDeldrimar/Rabbit/IMG_1389.jpg

this wire is right on top of the intake plenum, the brown bit is a spade female, and second wire with it has been cut and covered with electrical tape.
http://i566.photobucket.com/albums/ss104/DolDeldrimar/Rabbit/IMG_1391.jpg

this is that same wire, in its sheath, behind the engine connecting to the firewall
http://i566.photobucket.com/albums/ss104/DolDeldrimar/Rabbit/IMG_1393.jpg

what i believe to be the water temp sensor? only has 1 connector, but 2 spots for connectors…
http://i566.photobucket.com/albums/ss104/DolDeldrimar/Rabbit/IMG_1394.jpg

bottom of the airbox, where the hole is
http://i566.photobucket.com/albums/ss104/DolDeldrimar/Rabbit/IMG_1396.jpg

no we have those
what i meant was you have fancy engine managment with lambda, we dont have that ours were basic k-jet with WUR, all mechanical and basic tci-h ignition with vacuum/mechanical advance distributor, no fancy ignition computers here

i meant maybe the air filter got water in and is waterlogged is all, if its ok then we can move on. a bit of water in the inlet wont have been a problem, it actually can help on old coked up engines as the water turns to steam in the cylinders and cleans them up lovely. if you have ever worked on a car with a head gasket failure you'll know what I mean

pic 1: sorry i dont know what that is

pic 2/3: looks liek an earth to me, brown and brown/white 99.99999% on mk1/2/3 is earth

pic 4: that is a sender for an oil pressure gauge, lucky you! looks to be a VDO unit, and the 0-5 tells you its for a 5 bar gauge.

pic 5: i think that used to be the warm air feed, only really required for COLD environments (as in the UK isnt cold enough for this to be needed on injection cars, so think alaska )
to check if you open the airbox it should be linked to a flap which has some vacuum pipes on it. if so, dont worry about it and keep looking.

if it did have lambda control at some point, see if you can find the ecu for it, might be in the scuttle? if so see if it looks a bit soggy and dry it out. check inside the plug too for corrosion, same with the tci unit if it has one (7 pin ignition unit, again in scuttle) this is probably ok though if you get good spark though.

does the fuel pump run when cranking? maybe check the injectors next:
http://www.vwgolfmk1.org.uk/uploads/pdf/Testinjectors.pdf

pic 1 was referring to the unplugged cable on top of the unit, which the bently manual told me was supposed to be a test plug for the O2 sensor. still unsure of that one, but its never given a problem being unplugged.

pic 2/3: should i attempt to ground those wires and see what happens? (i don't particularly like that idea, but if it allows the engine to run… well…)
*EDIT*
its a brown/white, and a brown/red wire…. attempting to trace its possible origins via Bently manual

pic 4: thanks for that, i actually didn't look at the base of the unit, it never occurred to me that it was the oil pressure sending unit. should i be worried, however, that it only has one of the two connections taken? (my point in taking that picture was to show the 2 available connectors, and the one vacant)

pic 5: ok, well then… no worries? i guess i could just plug the hole with tape, or find a rubber stopper that fits?

the fuel pump runs, it does its pressurizing burst when the key is engaged, then stops, until i actually turn the key, and it runs. i have spark, i have gas flow…. if i force the engine to crank (pressing the gas a few times, etc) i can smell raw fuel from the exhaust, so fuel is getting into the engine (i assume)

the pressure sender is for a VDO gauge as well as the oil pressure warning circuit, if you dont have a vdo gauge then thats why there is only 1 wire. if you do have a vdoi gauge hooked to it then it may be your dash only uses 1 pressure switch, the early mk1s were like this

yeah if it is the warm air feed then dont worry about it, remove the vacuum lines to it and cap off.

next i would get a compression test done just to rule that out. if this is ok and spark is good then either the timing has slipped or its over-fuelling somehow, maybe check out the metering head rest position adjustment as per the bently, and make sure the arm moves nice and smooth. also make sure it will move thru the metering head air cone without sticking, if it does clean it up and adjust the disc slightly

i have  an oil pressure gauge, and it shows pressure (when the engine runs) so i think i'm good there.

i'll not bother with the hole then. its run with it like that for ages…

we took it to our local VW guy (by local, i mean a 45 minute drive at the speed limit, so make that an hour at our rate. thankfully we have a secluded and rarely driven road that passes near the shop)

i'll ask him what caused the issue when he's finished…. i just hope this kind of trouble stops. this is my perspective daily driver….  
i'm trying to sell my current car, gas hog of an SUV, and completely un-needed. i have 2 cars i can use as DD's, however i'd rather use the rabbit though. the other option is a '93 ford tempo…

*edit*
apparently the coil was bad… surprising considering it was brand new (less than 100 miles driven on that coil) and i had, what looked to be, a healthy spark from it…