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Yes, I think there is a teflon seal that comes from the newer engines. It should, in theory seal better than the older spring style seal. I believe that teflon has more lips in the seal to form and because it spreads out, can cover a tiny defect in the seal surface that a spring seal could not. The material is supposedly more resistant to the oil and suspended soot in the oil. Over a long period of time, the older spring style seal could wear a groove, the teflon seal supposedly does not and because of the larger lip, could cover the groove from the older style seal. Because of these reasons, teflon is supposed to be better.

You do not prelube the teflon seal during installation, that may be part of the reason why you wait for the seal to form to shaft. You do prelube a spring/rubber seal with oil and can use it right away. A teflon seal should come with a collar, if not you could just use a socket. You could always use a piece of paper to cover the keyway or any other sharp edges.

FEBI is a VW OEM supplier. Here are some links for the camshaft:
http://www.kermatdi.com/servlet/-strse-317/alh-camshaft/Detail

http://www.tdiparts.com/catalog/product_info.php?products_id=626

I would:
lock the pump and crank. Make sure the flywheel stamp is showing TDC. Slip the belt off the camshaft. Remove the camshaft. When you put the camshaft back on, it's just like a timing belt replacement except you don't have to remove the motor mount and belt. Here are more tips on removing the camshaft. It's some notes on removing the head, just follow the applicable steps and ignore the ones that do not apply to you.
.
http://www.myturbodiesel.com/1000q_how_to/a4/head_removal.htm

good luck!
 
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