The 98 beetle TDI can be read with the Vag-Com and should be readable with the cheaper OBD tools (though I haven't tried one of these tools). If the car has an aftermarket radio, the owner is probably right. VW radios are diagnostic radios connected to the data bus - most aftermarket radios emit power over the K (diagnostic) wire in the radio wiring harness which will then not let the Vag-Com or OBD tools read the computer. You can fix the problem by removing one pin from the radio wiring harness connector.
Read this page:
http://www.ross-tech.com/vag-com/aftermarket-radio.html
The check engine light could be due to many possible problems - many are cheap and easy to fix. I just replaced an coolant temperature sensor that cost about $6 from Autozone and I replaced myself in about 10 minutes. I wouldn't buy the car with the check engine light on (unless you have the diagnostic read-out on fault codes) unless you can get it at one heck of a good price and are willing to take a gamble.