I had a Beetle (My first car 1200) and it too lost a circlip - not I hasten to add due to my rebuilding skills! - and scored the bore - I can't remember now how I found out - I think I did a oil change (every 3000miles with mono oil from memory) Just a gauze filter - anyway out popped a twisted circlip.
So in true Beetle style, dropped the engine and did a rebuild - which wa easy as you simply bought new cylinders, bearings gaskets and threw it back together. No water to worry about, just 4 bolts to hold it on the gearbox, throttle cable and fuel. Optionally reconnect the flexible heater hoses