Actually this is a good year engine to have. Easy to fix, reliable, we get 40mpg doing 80mph.
First thing (if you buy it)
*buy a Ross-Tech Hex-USB interface with the software and you can take a look at all the systems on the car including the engine.
engine
*the miles are starting to get up there, but as I said you can rebuild it if you have to
*timing belt and pulleys- the stealerships are notorious for not doing this correctly ( buy the parts and do it again yourself) or get a parts list from the dealership for the work that they did and check it all
*general maintenance- look for signs this has been taken care of, any bypass filter?, check the oil pan for hits, see if it has a plate to protect the engine from curbs, does the engine look like hell or is it clean, oil leaks,...
transmission
the auto for those years (I have an 01) are again notorious for failing, be ready for changing it out to a stick shift in the near future.. see if they will give you a tranny guarantee for the vehicle or price a new transmission and use it as a bargaining point
suspension
I just bought an entire kit to redo the suspension struts, shocks, and bushing for something around $700, haven't put it in yet (the reason I bring this up is that for less than 1k you can bring it to better than new)
If I could find that year in a station wagon for that price I would consider buying it. That is a bit of a small car, short wheel base, for lots of hwy driving. Also, there may be lower mileage cars of those years out there, shop around.
Go to
TDIClub Forums - Powered by vBulletin and research big time. You can look here for classifieds as well.
Good Luck