Oh man i haven't been here in a while, well you CAN get a re-build kit for the air springs that audi sells for less than $100, which is what i always use to repair it.
Sorry incrementalg about your poor service at your dealer, sorry to say it but good audi techs are very hard to come by these days.

 

Our 01 AllRoad had the same problem took it to the dealer where we had both front shocks replaced plus the pump as ours was burnt out estimate was for 3200 bill came out to be 4200 due to an increase of parts cost the pump alone was 800 bucks then to top it off while car was at the dealer someone hit the front end.will post new question about that in other thread,thanks to auditech79 and lonestar for their posts as I now know there rebuild kits availible and labor doesnt seem to be much of an issue

 

Yeah, it turned out that if I leave it on level 3, it doesn't drop, but if left at level 2, it drops. I guess it has to do with where the tiny puncture is located..
Also, last year it cost me about 900 to replace the front left one, now it was 1700 due to price increase in parts!? What the hell!?!?

 

I've had my 01 allroad for about 6 months. Recently since it has gotten colder (about 0 deg f) last night the air adj started malfunctioning but I would reset it and turn the car off, start it back up unreset it then it would raise back up. This morning I noticed it was low (below the #1 setting) and I can't get it to move at all. I can hear the pump running but nothing happens. If it doesn't raise is it safe to drive to the dealer?

 

It warmed up a little and I finally got the car to raise. I raised to #3 position. I put soapy water on the front shocks but no signs of leaking. It was too cold to try the rear. This morning after aanother cold night it stayed in the #3 position. Is there a sensor that could be malfunctioning rather than compressor or shocks? Could I remove the compressor and try to rebuild it or do something to make it be more powerful. I know I'm reaching here but I'm desperate.

 

I think there are modulators for each of the wheels located in or near the black boxi under the rear of the car. For all the crap I went through with getting mine fixed and air springs replaced, it turned out to be one of the modulators for my rear wheel.

 

Oh man.. I don't think I want to know how much you've just dropped into it.