A welded diff should take care of the wheespin issue (and present new maintenance/driveability issues).
I have run with no front sway and with stock front sway on my Scirocco street car at autocross and track events. While it rotated a little better at the autocross without the bar, it didn't seem to help in the high speed stuff. The body lean was noticeably greater. I now run the stock front bar. Oh and trailing throttle oversteer becomes more abrupt, which I didn't want in a year round daily driver.
My wifes 90 GTI has bigger front and rear swaybars and really corners well, for a street car. It does not have the same quality shocks as the 'roc (boge vs. Bilstein Sport), but handles better. Of course the digi 8v doesn't make enough power for wheelspin to be a major issue, but my lap times at Gingerman are just as good or better in the Golf when compared to the Scirocco.
On my ITB project (target Feb 2002 completion !!! I just need the wife to not shut down the funding) I hope to be able to dial back some of the front spring rate in the used suspension I bought(from 550) and use a swaybar. When I get the time, I want to run stock bar, stock bar with poly bushings and upgraded bar setups to get a feel for how they each react to my driving style. After all, compatability with your driving style is what really matters, and some guys will be fast with no front bar while some guys will be fast with a big front bar.
If I were you, I would try it both ways. Especially since it is so painfully easy to pull the bar off a mk1 car.
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Chris