Problem with rabbit engine in bug

That is a pressurized sealed cooling system. You should use the correct expansion tank and psi cap so it can do just that, expand. First get the right tank and go from there, you could have air in the system and/or depending on how the pipes and hoses are arranged there could be steam pockets if the layout is not correct. Also, the tank should not be inside the car. Do you have pictures so I can see how it's set up? That would help.