Hello and welcome!
Can you measure the length of the dip stick so another MK2 owner can compare? I am sure the oil cooler drains when you do an oil change as it is higher than the oil pan. Also when checking the oil level using the dip stick, a fair amount of oil is held in the oil filter if you are still using the original oil filter mounting and hoses (the oil filter is upside down)-that may be where some of that .7 quart is!
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