From the Tech Support Archives: VW A4 platform "Flashing Coolant Light"
On 1999 and later Volkswagen A4 platform cars: Customer complains of a “flashing coolant light when first started cold”. When verifying this complaint, coolant must NOT be warmed up. Back probe the signal wire with a DVOM set to the A/C voltage scale, turn the key on and check the voltage reading. A reading above 0.5v will turn the coolant light on.
With the meter still connected, open the coolant reservoir and gently clean the coolant level probes with a flat tip screwdriver or similar tool and watch for the voltage to drop.
Note that some sensors are not accessible. If the readings are above 0.5 volts and the sensor is inaccessible, replace the the reservoir/sensor unit.