In 1997 Volkswagen included the radio in the diagnostic circuit, referred to as the “K-Line” (pin 7). Prior to that, Volkswagen used pin 7 as a power lead from the radio. The problem occurs when someone replaces the radio with an aftermarket model which brings battery voltage to pin 7. The radio will work fine and the customer will not know of the problem (and neither will you). During the scanning process your scan tool will ground pin 7. If the radio is non-diagnostic capable it’ll kill your scan tool when it grounds pin 7. Some scan tools have a fuse to protect this from happening.
As a test you can install a 5-amp fuse between pin 7 and pin 4 (ground). If it blows the fuse then pin 7 has battery voltage and you should not scan the car until the circuit is repaired or you unplug the radio. You find more information on this on the Ross-Tech website http://www.ross-tech.com/vag-com/aftermarket-radio.html
Special thanks to Mervyn Witheron from Burnside Garage in Coleraine, Ireland for providing the link and to Robert Moreau from Sonnax Industries for providing the test.