I've finally got round to copying my music onto an SD card (a 64GB Sandisk jobbie, £23 from Amazon). The process was a bit of a faff, since you need to convert any iTunes music into MP3 format (iTunes uses a different file extension I believe), then copy the tracks to the SD card. Trouble is, it imports the track number as well, so you get "06 Number Of The Beast" and then have to rename the file, e.g. to "Maiden, NOTB" or whatever. Also, ripping CD's direct to the SD card takes quite a while. Finally you have to reorganise the music into playlists since it imports them by artist. So, yes, rather clunky but that may just be my incompetence.
The good news is that the sound quality over and above that of the iPod I was using is huge - we now have bass! Music sounds far more punchy and realistic and I can at last hear what the Dynaudio can do. I have formatted everything as 320 Kbps. Given that iTunes is 256 Kbps, which surely isn't too inferior, I'm thinking that the VW system is doing something odd with the data from an iPod, which it does not do with the SD card. Anyway, I'm delighted with the sound from the SD card, and thank you to those of you that told me it was the way forward.
Bubba.