Steps to scratch build a VW

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Pops

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My guess is the coil power wire. From the factory they had no fuse in that circuit. Wire to the points often fell off and then the whole wire loom melted from the dead short. Common fix was too move the wire with a jumper to the other side of the fuse block. At least then when the wire came loose all it did was blow the fuse to the horn.
Fix the loose wire put in a new fuse, or wrap the old one with a gum wrapper, and keep driving.
Exactly --
About a year ago a local man bought a VW that wouldn't start. Stopped by my place and ask if I would look at it. The coil power wire was shorted out somewhere from the front to the rear. Just ran a new wire. Lot of times the power to the coil also jumps from the coil to the reverse switch on the transaxle for the backup lights. Wire falls off the switch and shorts out and burns the wire out to the coil.
 

Hot Wings

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That isn't a blown up engine. It's just a bit worn. A 'blown up' VW has a nice little hole where the red circle is.
blown up.jpg

edit:
Was a little quick to brand the engine in post #644 as a 356. Looks more like a mid 60's 912.
 
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Pops

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I was running about 75-80 ? mph on the interstate one winter when the 1966 VW beater I was diving had a head of a valve break off. Made 3 large bangs and the rear wheels locked up. Almost rolled it before getting the clutch in. Not much of the engine left. Engine parts on the interstate. Only part of the engine that was use able was mostly the distributor , carb, generator. One side of the engine case was mostly not there. All rods bent, etc.
 
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