It sounds like most of the vital work has been done, which is good. As for the clutch and the jerkiness in driving, Audi sets their clutches up to engage when the pedal is most of the way out, far off the floor. I've never driven any other car with a clutch pickup point so high, but rest assured, it's normal - you just have to adjust to driving it that way. Give it a day or two and it'll feel natural to you.
The AC may just need a recharge, but you may also have a problem with the system. When I bought my car the AC was weak, and I tried a recharge to no avail. My refrigerant level is fine, and the compressor works fine, and I have no leaks in the system, which leads me to think that the problem lies in the expansion valve - if that fails, the air won't blow cold (on my car at least, that's pretty much the last option).
Any car with that mileage will have some scrapes and chips, so that should be expected. I'd ask them to clean the car up for you though - first off, when someone is handing over money for a car, the least they can do is hand over a clean car. But also it'd give you a chance to see the condition of the car more clearly and see just how much TLC it needs.
The shifter may work for you, but as I found out, our cars' shifters sit somewhat high, and if you get a knob that isn't made for our car (and even some that are), you'll find that it sticks WAY up. The one I bought and installed, and promptly took off and threw away, must've sat 3-4" higher than the stock one. You're probably better off looking for another OEM knob, or shopping with
www.ecstuning.com,
www.purems.com, or another tuning house known for our cars - they're more likely to sell shift knobs that are made to sit at the correct height, without looking like they're infused with viagra.
On the split in the seat, the easiest and possibly cheapest option to return the car to the right look would be to check the classifieds section here on the forum, and also eBay and Craigslist, and find someone selling a seat similar to yours, and just replace it. Seat covers generally look like hell and don't fit well enough to belong in a Tercel, let alone an Audi. Getting the seat repaired is an option, but if you have side airbags like most A4s do, built into the side of the front seats, you may end up paying a lot more money due to the "danger factor" of the airbag. No promise that it'll happen, but some places will charge more when they have to worry about detonating an airbag.
The check-engine light (CEL) coming on randomly doesn't make much sense. Take the car to AutoZone and have them scan the car - they'll do it for free and it only takes a couple minutes to do it. They'll give you a list of any codes stored in the ECU, and you can post them here to find the definitions out and what to do to repair the problems they indicate. It could be an O2 sensor, but then it could be anything that the car monitors - once you have the codes, post them up here and we can define and troubleshoot with you.
Finally, as for the turbo model, they do tend to be more mainenance-intensive than the V6 models, but if you want to tune the car and modify it, and don't want to fork over a kidney for a supercharger kit, then the 1.8T is the only way to go. It won't kill you financially in the same way that the S4 is reputed to do, but a naturally-aspirated V6 model A4 will be, in general, the least costly of the models to maintain, trading off tuning potential for reliable, largely worry-free driving.
Am considering a '97 A4 2.8 Quattro. What next?
Glad it helped out, and hopefully everything will work out well enough that next time we see a post from you it'll have pics of your newly-acquired Audi
