ok so here is an update.... I took it in today and they said no problems. I expected that from them.. Why are the people at service desk sooo stupid! They always think you have no idea what you are talking about. Thing is because this doesn't happen when i just start up the car. It happens after I have been driving it for a while.. I tried driving 2 hours before bringing it in but I couldn't mimic the problem. I understand that DSG is adaptive but the fact that the Gear selection display blinks is some sort of problem. I can't be convinced otherwise... Darn.. Can anyone confirm if you can reset DSG with that 10 second accelerator trick?

 

I was wondering if there are any codes for the DSG light to blink.

If there are no codes, then dealer can have an excuse not to do anything..

 

1. As 4ringsrod said, make sure you have the latest revision of the ECU software. The ECU on my 2006 A3 2.0T DSG has been updated at least twice, once for the I3 update, once for the "intake flap runner" update. While neither of the above updates addresses the DSG, Audi USA does not detail every little change in every revision. If you have an APR "chip", I know for sure that later versions of both their Stage 1 and their Stage 2 tunes address DSG smoothness.

2. DSG transmissions on 2.0T FSI motors are supposed to be serviced at 35K. This is an expensive service. On 2006 models, it's supposed to be included, but sometimes dealers may "forget" to do it, to your detriment. Make sure that was done. I had to remind my dealer at 35K. On 2007 and later models, it's not included. If you skipped it, then it's "penny wise, pound foolish."