That looks like a $150 EMPI GT 2 Tip Glass Pack Muffler that fits Standard and Super Beetles as well as Karmann Ghias with 1300cc to 1600cc based engine. I bet all the muffling fiberglass has blown out or settled/compacted. I'd also check for carbon evidence of leaks at joints, where the heat exchangers mount to engine, and around head to cylinder mating surfaces. Looks like very clean engine so should be easy to see.. Neither your intake manifold nor the exhaust use the heat riiser tubs so don't need the block off plates. Ate your head exchanger maybe rusted internally - car would probably smell like exhaust/oily when heat is on.