For what it's worth
Option 2 is the way I would go.
Next I would request what Scottymon suggested but with the parts being supplied at trade and you've got yourself a lot of parts and repairs at a fantastic price!
The bit I'm puzzled at is why they want anything from the RAC since they seem to accept it's down to VW.
I wonder if there double dipping and being paid by VW and you, just a thought!
Thanks for the info and I am thinking of going down that route.
Could be that they are getting VW to pay and charging me but then
Would VW really supply a brand new engine to fix the issue. Would they
Not just cover the cost of repair maybe.
What is the DMF/Clutch that scottyman was on a about and what sort of
cost would that roughly be?
Is there anyway of me finding out if VW were covering the cost and they
were charging me.
Also thinking of maybe seeing if they will knock the price down a bit