i heard oil sludge can damage an engine, but it wouldnt do a write offs worth of damage. your car is worth at least £3500 private. a new a4 1.8 engine is upwards of £1200. i saw an audi a4 380bhp engine on wbay which sold for £1800 - 35k miles.
id say get an AA mechanic to have a look at the engine. i think more should be done to confirm your car is a write off.
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