The only common problem with those even when they were okay was that the ATF would seep into the diff.
Indeed. The early transmissions had machine-work flaws on the seal housing between the diff and the slush box. The machined hole was larger than the original factory seal. WHile I never did the repair, I saw a VW tech do it a couple of times. The VW service bulletin was to replace the seal, but also to use a special paste on the outside of the seal edge.