Then yeah, the ballast are mounted on the bottom of the headlight assembly.

 

Do i have to remove the bumper to do this?

 

Uhh.. not necessarily:
Hot damn! Headlights "removed" from my car this AM!!! - AudiWorld Forums

But on the 02-04's there is a 4th lower bolt towards the radiator:
03 A6 Headlight removal.
You can see it being discussed from post #19 on down.

I have an '01, so I've only had to deal with the 3 bolts. No sure how problematic it is getting the torx bit on that 4th bolt.

EDIT: Actually it appears that you don't really need remove that 4th bolt, but you need to do "pop the small tab out" to remove the headlight:
http://www.audizine.com/forum/showth...50#post4106650



Probably a good idea to lay down some painters tape over the chrome trim under the headlight to avoid scratches.

 

if your headlight housing/lenses are not clear any longer they can reduce the amount of light getting out also. I have had to wetsand/polish my headlight housings a couple of times and it makes a huge difference.

 

Hey guys,

So I took the headlight apart and there was condensation inside the housing and water pooled inside. So I ended up putting everything back together, didn't want to risk shorting out any other components. My thought of line is just to buy a new headlight assy. And install it. What do you guys think?

 

Depends on what you mean by "buy a new headlight assy.". New as in, a used one in good condition? Or new as in buying it from the Dealer?

New from the dealer will leave you with a naked wallet. You can find a good deal on the headlights via ebay, part outs on the forums etc. Just have to be patient.

How hands on are you? You can always separate the headlight lens from the assembly(I use a heatgun on mines). And clean things up, and then reseal the light using a fresh headlight sealant like "oci butyl rubber glue":
OCI Butyl Rubber Glue - Accessories from The Retrofit Source Inc

Or even reheating the original stuff and try to see if you could reposition the sealer to get a better seal.

 

You can get some decent used ones somewhere. Taking them apart is no big deal. But before you do that make sure rear cover and parkinglight/blinker are all seated properly. If water still gets in strip it down and reseal. On the cars I run into in shop id reseal and even drill a couple holes on bottom of light where the water would collect. The drilling I learned on domestics whose taillights tend to hold water.