I had similar probs with a 205 tdi and we tried various fixes. Main thing was to check water level daily and top up. It used gallons of water but still ran well My main concern was no water and consequent seizure.
In the end I got a new head gasket but an expensive job with a turbo bolted on in labour terms.
I'd say try the fixes first and it might be OK. If not - well pay up or scrap!! david
Got a similar problem with the Toyota Previa, and was looking around at some products
one of the cylinders is letting water in, so is misfiring on start, and quite a bit of smoke (unless I drive it every day) but runs ok when running and warm
only paid 950 for it, and its 500 for head gasket replacement, I know they mentioned a product over on the Shogun forums that is supposed to be pretty good but the name eludes me for the moment (it is from the states too I believe)
Mine is losing about 3 pints of water for 5-10 mile trips from cold
Could always try putting a touch more torque on the head bolts*
Tighten in a cris-cross patten. Like you should do with wheel nuts.
*will not be held responsible if a bolt shears off
Pug 1.9 diesels are common for it. Lack of coolant changes is the main curlprit - old acidic coolant eats the gasket. Simple job, somewhat labour intensive as its typically French with everything being positioned in a ****-eyed manner. Not as bad as doing the same engine in a Pug Expert van....bad back anyone?