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RE:Audi Brake Fluid

> says that the brake fluid and the power steering fluid are the same type 

No, the brake fluid is DOT 4 such as Casrol LMA and it goes in the 
canister above the master cylinder. The hydraulic fluid (Dexor II) which 
powers the brakes and the steering goes in the upright cylinderical
canister attached to the firewall. Using the wrong type of fluid can be
harmful to you and your car!

> 1- Do you guys agree with my diagnoses.

  If you put DOT 4 brake fluid in into the master cyliner, you
  should be OK.

> 4- Audi is quoting $290 for the master cylinder and they do not carry rebuild 
>    kit.  Are there cheaper sources.  Also are there rebuild kits for the 
>    master cylinder. The brake system is Girling.

German Parts & Restoration (GPR) is a good source for Audi parts. I'm sure you can get it cheeper than $290. Their number is (800) 321-5432. Good luck!