Save the engine and tranny to sell on ebay, and thank your lucky stars that you still like the car given the multitude of major headaches that it causes most folks. If it weren't for 98-05 VWs, our shop would be broke.
Take whatever you can get for parts and relax knowing that you would have spent thousands of dollars keeping the check engine light off.
Then, find an insurance company who doesn't lay down and pee themselves when another insurance company says that their client didn't run a red light. Insurance companies have lawyers who are paid INSANE amounts of money. If your insurance company won't fight to save their own client, it means they are worthless. If they don't have the money to fight fraudulent claims, then they don't have the money to pay you for legitimate claims... which is why they lay over and play dead.
Or, you can hire your own lawyer and file a civil suit against the other driver.