Josh
Rolla,#2Consumer Suggestion
Sun, May 27, 2012
Engine sludge is caused by not changing the oil often enough. You admit you didn't change the oil at the recommended interval. Why are you surprised that you have sludge and that VW refuses to give you a free engine? Oh, and "premium" gasoline makes absolutely no difference to the engine (unless it specifically requires it, in which case it won't run on any other kind).
Also, changing the oil more often is always good, particularly when the engine gets old. 5K is pretty aggressive for an engine with 120k miles on it. 3000 miles would be better.