I suspect you may have a worn/missing relay shaft ball & knackered linkages. If you look in the engine bay, you'll see the gear linkage bolted to the gearbox. See this diagram so know what I'm on about
http://www.4crawler.com/Diesel/ForSale/Images/shiftkit_31.jpgThe relay shaft likes to drop off, if you have a decent scrappy near you you can get a replacement. You can also use the ball off a rod change MK3 Golf & some SEATs, the shaft is different but you can pop the ball off & swap it onto your shaft. While you're there, have the weighted shift rod off it too
Also if I were you, I'd get the gearlinkage repar kit from
http://www.gsfcarparts.com and replace the lot on your workbench, its much easier that way!
Oh and grab the gearstick & lift it upwards, if it moves upwards at all you need to replace the gearlever housing under the car:
Its pretty straightforward to do but a bit fiddly. You can still get the repair kit from VW, part number is 191 798 116A. I would recommend you get the genuine kit, this isn't a job you want to be doing twice!
1. Remove the gearstick gaitor & centre console to give you more room to work
2. Undo the 2 10mm nuts either side of the gearstick.
Now get under the car
3. Remove the exhaust centre heat shield by removing the 6 nuts/clips holding it on, then rotate it round the exhaust an off the car
4. Shove the housing up into the car, it is only held in by gravity & grease at this point
5. Remove 4 13mm nuts holding the shiftbox to the car
6. Now get back in the car, pull up on the stick and push down on the shiftbox
7. Next Jiggle the gearlever housing about until you can get it out, bit of a fiddle but it can be done!
8. If the ball looks like it is worn you can remove it, I didn't bother as it looked OK. Its tricky, you need to press the ball upwards while someone holds the gearlever down, then you need to remove the split pin. Not an easy task!
9. Refitting is the reverse of removal
