I'm looking at purchasing an older VW Caddy... 1.6L

Popped the cap of the radiator expansion tank.
It seemed almost full of this nasty whitish oily stuff.

According to the previous owner, it was doing ok, running a freshly rebuilt engine when the water pump/alternator belt broke.

She supposedly pulled it over soon... (before the needle got to 100%).

It is a bit hard to tell further on the history, but I think the oily stuff showed up in the expansion tank after that.

Motor oil looks black, but otherwise unremarkable.

Anybody know, is that whitish stuff Biodiesel or motor oil?

Bad head? head gasket? something else? Tow it to the junk yard?

Back in my younger years I had a VW Fox that I never changed the oil in. Not even once!! I know I drove this car daily for a good 2 years. After all it leaked a bit of oil and every few months I would just add a quart. Somewhere along the way I lost the oil cap, neglected to replace it, and undoubtedly water was getting into the crankcase. Everytime I would check the oil level there was a thick nasty whitish layer of gunk on the dipstick. From what you describe I'd definately suspect oil and water.

Overheating followed by crud in the radiator usually indicates a blown head gasket letting combustion gasses into the coolant, these gasses usually cause foaming in the radiator.

White scum in the rad is oil for sure. It can mean the head gasket but check first to see if it has an oil cooler. It would be under the oil filter with a couple of coolant lines going to it. They can do the same thing

Check the easy stuff first before getting into a head gasket. It could save some money and frustration