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If it's not lack of fluid it most likely is a lack of pressure. The oil pump might be going bad, or the solenoid that controls it might be. Also could be a piece of debris blocking the passages.
VW transmissions are not known for their longevity.
No, the neutral safety switch makes the car not start unless it's in park or neutral. If it's defective the car either won't start at all or will start in gear, depending on the issue. It won't cause a "thud-BANG" or any sluggishness so I'm not sure why it was suggested.
However, about six months ago the Automatic Transmission in my 1986 Jeep CJ-7 needed a complete replacement due to "thunking" and other weird noises . . . the final bill was about 2,500 bucks.
For what it's worth . . . it runs / sounds Better Than New now.
Good Luck.
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