I've got the 105bhp engine in a golf. I've done 35K in two years and not had any problems with it. It does like a drop of oil (approx 1 litre every 10,000 miles, but I am on the longlife servicing). I colleague has the Octavia with the same engine and I know that's used a little as I put some in it for her a while back.

I've still got the Golf for another couple of weeks. It's a 1997 TDI 1.9 (90bhp). It's done 193,000 miles, and nothing has ever gone wrong with the engine.

It sounds like your engine is in limp-home mode. If so the ECU should be showing faults.