Q&A

 Master

This is a gear position sensor, it tells the transmission computer which gear you have selected, for shifting purposes, as well as reverse lighting and engine starting (starts in park or neutral only)
Here is some more information: http://bit.ly/6ZvCC4
Chances are it needs to be replaced, but find a good VW shop, they will have some experience with this problem and will likely know exactly what to do.
Here are some shops in your area: http://repairpal.com/saint-petersburg-auto-repair