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Turbo gone big time.

If it has been serviced up to now, Id be onto VW to see if they will make a goodwill gesture towards it, failing that, get onto the local vw forums and see if you can get a cheap used turbo. Could save you a fair bit.

Brendy's right try the VW dealer.
My Golf was about 1 year past the warranty running out but VW knocked 60% off labour & parts as I'd always used them for service etc.
It's worth a try.
 
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