Hi Guys,
New to the forum but been a lurker for a while and have had my GTI for about a year and half now, thought I'd chime in on this one as I had this on my GTI a couple of weeks after I got it but annoyingly the car was out of warranty.
It was the ABS Pump that needed repairing/replacing and I ended up having it taken off my car and sent to BBA-Reman for repair. Unfortunately the repair didn't work first time and the light came back on a few weeks later so sent it back again and eventually they replaced it with a different one. I think the problem is common across the VAG group on models that use this part, but VW haven't issued a recall even though it's a safety related problem.
I read up on it at the time, and VW apparently offer some people 50% off the parts if out of warranty, but as that would have worked out about the same cost and I wanted to get the car fixed quickly without waiting for them to decide I picked up the cost myself. Having had the problems I had anyway it would have been easier to go through VW so lesson learned. VW however wanted an hours labour just to diagnose it themselves even though I had already had it connected to VAG-COM with the error codes, dealers eh?
I haven't watched that watchdog clip yet but will do so when I get a chance. Glad to hear they replaced the OP's under warranty.