[drajac]

Yes, the same one (1K0-122-157-GH as shown on the first pic with tools). I agree that remote operated clamp tool would help a lot and would definitely order one for the future. BTW, where can I get one? Sears doesn't have it here in Canada.
I was not thorough enough to read dano's instructions, so I did not remove the quick connections from the heater. This might help a lot as it would be easier to remove hose clamps on the bench in oppose to what I did.
As I said the only problem I had was attaching plastic air intake to the housing of turbo charger. It has a bracket and a screw. I aligned the bracket (far side closer to the cabin) and used a wooden stick to hammer it on to align the screw with the hole.

I did not remove the heat shield on the bottom (silver bag thing). I managed to move it around so that I can access everything and did not want to break something by removing it.
Also, I flushed the coolant as I added a lot of distilled water (removed lower radiator hose and pumped compressed air). Added coolant as described, several times, always to the max line, and then drive it for a bit.

And that's all; car runs great, no evidence of leaks.

Now, I am looking to purchase a good service manual with part list. Could you recommend any (where did you get that diagram from)?

Thanks to both of you guys!