If the car is never driven on the open highway where it can get up to 50 mph for at least 30 minutes - the oil isnt going to get fully warm. So the water vapor that gets blown into the oil around the piston rings wont get boiled back into vapor and out the exhaust. It will collect in the cool parts of the engine, as a sort of milk-chocolate milkshake consistency. The top of the engine - cam cover - is one of the coolest parts of the motor. Since you live where its chilly and damp - this is normal, and more noticeable in winter. You may indeed have a head gasket leak that is just starting, but with those compression readings - its not bad yet. Another way to check for a blow headgasket is to look at the radiator cap, to see if there is any oil scum building up. That would be oil from the engine getting pumped into the cooling system. If the coolant looks clean - dont go taking the head off yet.
While its possible to have a cracked block, a head that is warped or has a crack is about 100 times more likely. I would think a rebuilt head would be about $300. You could check prices for 'jetta cylinder head' at
www.ebay.com. I would think the labor to install it would be about $200 to $300; but remember, there is usually something else needed along with the new head; or at least things worth fixing because they are easier to reach with the engine head out of the car. (The starter on my 1990 Jetta is one !!bleeping!! example).
As for a new or newer used car: She should check what the payments & nisurance would be; and if you have a loan to buy the car, be sure to figure the cost of the comprehensive insurance the lender will require. $500 each month or two may be cheap compared with a new car or one new enough to have no big mechanical problems for a couple of years. Personally, I prefer to spend my money on parts for the old car. I already own a big set of tools, so I do my own work.
One reason for your compression readings being higher than the ones in the manual could be that compression pressure gauges dont have to be very accurate. The important feature is consistency, and showing up a cylinder whose comp. press. is like 50, or zero.
And you need to get the temperature gauge to work right!