How does the waterpump stream look in the coolant tank; as shown in the video, it should be a strong stream, if not the waterpump is bad or the hose is clogged. If you remove the thermostat; you can inspect the waterpump and confirm that it is in good shape, premature wp failures have happened before!
Have you scanned the car for trouble codes; what are they? I have heard of the coolant level sensor in the coolant tank failing; so, that could be a good call and not that expensive of a part, that could cause the flashing light. When a part fails (sensors, waterpumps etc.); typically, there will be a trouble code, that could help you diagnose the problem.
As far as the universal antifreeze goes; we use it at our shop but I prefer to use the VW stuff in my personal cars. The universal is cheaper, shops don't have to carry specialty coolant for all the different cars and so its convenient for them to get from their suppliers. Whether it meets VWs specific standards/specs and whether it lasts as long, protects the cooling components, causes premature wear/problems, etc.; I think is up for debate. Of course; if you use, what VW recommends; then you don't really have to worry about it. The real danger; is mixing the green and the G12/G13; it coagulates and causes overheating issues (requires full flush, clean system and refill). You can generally order Pentosin; from most auto parts stores, which is the same type VW uses and recommends. Whether you want to flush the whole system and go with Pentosin/VW is up to you; if you do end up needing a WP, you could do it then.
Here is one example of universal coolant:
http://www.havoline.com/products/coolants-antifreezes2.aspx
Pentosin recommends PENTOFROST SF:
http://www.pentosin.net/f_antifreeze.asp
SF-G12: Pentofrost
http://www.showmetheparts.com/BIN/documents/CRP/CRP-116_SellSheets_COLOR_SF.pdf
Blauparts, has a good informational page about VW recommended coolants:
http://www.blauparts.com/vw/vw_fluid/vw_coolant_engine_fluid.shtml