Hey David,
I'm the previous moderator for the Golf 6 forum here. I don't post anymore, but I saw this and thought it important enough to do so.
I couldn't see in your post, or any of the replies thus far, any mention of the 24S4 Service Campaign.
There is a thread about it here. It's a bit long. But basically people with the 118TSI were having engine failures, involving some or all of the symptoms that you mentioned. It was not only occurring in Australia, but also Singapore and a few other APAC places. Turned out to be the ECU not being properly calibrated to the quality of fuel available in this region.
(Sorry if some of what I'm saying isn't quite right, this is from memory of the details of this issue from 2009 to when I stopped reading/posting at the end of 2011).
Anyway, this is hopefully quite clear why I bring this up.
If your car did not have this 24S4 update performed, then VW have messed up here and not only should they be liable for the entire cost here, I'd be demanding a brand new replacement engine, not a repaired/reconditioned.
However, even when cars did have the 24S4 update performed, there were still a certain percentage that failed afterwards, as the damage had already been done. So this could still be the case for your car.
I'm glad that they are fixing this for you gratis, but hopefully there is still some useful information here.
Cheers,
Corey_R
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