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Lengthy- Perplexing quattro dilema (HELP!!!)

Hi all,  Well I'm about as frustrated as I can get!  A little background
information- (I want to keep this somewhat short, if possible. I know how
much everyone loves to read long, endless ramblings).  Basically, I bought
this 854ksq w/140,000 from my old mechanic's father, who has some stake in
the shops ownership.  He purchased the car from who knows where, some
auction for very little money- I'm guessing about $1,000.  They sell used
cars from time to time, but I don't think they have a dealer's license.  I
was stupid in not doing any research on the value of these cars.  I think I
paid too much for the condition of the car.  ($2,300)
    Anyway, When I purchased the car, the paint/body was pretty beat, paint
and clear coat  peeling and lots of little dents, scratches and dings and
two medium sized dents.  Also the interior was not clean to say the least.
the power windows and locks worked but the sunroof needs cables and all the
door handles, except for the drivers', needed replacing.  But they replaced
a few things-  tires, shocks f/b, belts, and minor tune-up parts.  They told
me, the father and the mechanic I trusted so much, that the car "checked
out."  the father had been driving it for a few weeks.  And they supposedly
checked the whole car over.  I didn't even consider taking it somewhere else
to get checked out.  I had taken to V.W.'s to this person for about three
years and was always treated fairly and became good friends w/ the son.
    So basically, I purchased the car @ the agreed on price with the
understanding that I was buying a fairly mechanically sound car and that it
ran much better than it looked.
Boy was I wrong!  Since purchasing the car in November of 1997, I have sunk
about $1,600 into it !  Here's a little break out:

$300- center support bearing replacement and service(BMW part conversion)
$150- slave cylinder replacement
$650- body work and cheap paint job
$100- set co/idle/timing,etc...
$200- diagnose cooling problems- replaced thermostat, thermo-fan switch, and
a bunch of other stuff.
$150- for miscellaneous parts and hardware: headlight switches,

    I am so frustrated!!!  I really like the car, when it's running. These
figures may not seem like too big a deal but also considering the constant
pain in the ass the car going into the shop is- it's been in about 7 or 8
times in 3 1/2 months and who knows what else will break in the near future.
Now I just found out that I probably need to replace the EM!!!!  Big job!
Lots more $!  I definitely would not have purchased this car knowing that
all these things were wrong!  Just goes to show that you really can't trust
people you think you can.  I understand that they are in a business to make
a profit, but at what expense- my sanity!!!
     I would just like to know what, if any recourse I have in dealing with
this matter-  (legally, of course).   Or do I just suck it up and wallow in
the misery of a car that breaks down every week.  I'd appreciate any
suggestions or similar experiences that anyone has gone through just so I
can figure out the best way to handle the situation.
Someone should start a support group for "Audi owners who are being mentally
tormented by their unreliable cars."
Sorry for the endless diatribe of babbling and rambling- I began to vent my
frustration when writing this- you should see my office!

Thomas C.  Turse, Denver, CO
85 4ksq  140,000