If you've never driven one or are used to driving a lot of higher-HP gasoline powered vehicles, the old 1.6D can cause quite an alarm to most with just how slow it is and can be.
They are notoriously slow, but make up for it in other ways some people find very attractive.
They were marketed and sold to frugal minded people who wanted basic, reliable, economical transportation.
Diesel was cheaper, a lot cheaper in some places than regular unleaded unlike today.
If you needed to put a lot of miles on a car and wanted to do it as cheaply as possible (lowest cents per mile) over the next 5-10 years, you would be wise to look at a diesel VW.
They were made to be worked on under the hood and easy to maintain. Any old Joe Blow with the Bentley and about 100 bucks in special tools could maintain one in his/her garage easily for many years of ownership; this is still true today fortunately.
Did most people buying a diesel VW care about its 0-60 time? Hell no.
Ok rant off...
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Compression, timing, and fuel are arguably the 3 main factors here for power output.
When you only are working with 50HP stock, even very small increments of 5-10 HP (10-20%!) will be immediately felt.
Seems like you found the smoke screw. That is the first thing people usually go adjusting as soon as they try to go up a hill.
It is very sensitive, so try turning it very, very little at a time until you are happy with the smoke/power output.
If you are still not happy with the power I don't know what to tell you.
You are just experiencing the power of a 1.6L diesel with ~50HP.
If you are serious about owning, driving, and maintaining the car yourself for awhile, I would invest in a Bentley Manual and at the very least a $30 compression tester from Harbor Freight to check compression.
I would not take for granted any previous work done by a previous owner as being satisfactory and done to correct specs, that is just me though. For how much it costs to buy the tools and check things yourself, you are foolish not to check and see these numbers with your own eyes (compression numbers, what it is timed to, etc).
Again, this is assuming you actually want to maintain and learn about the car.
If not, I would have not purchased a 32 year old diesel car.