I decided to change the filter because I am not the first owner of my car, and being a B5 it's going on 12 years old now with 139,000 miles. I figured it would be good preventative maintenance. I figured the filter hanging there was not right. I will have to take it back and have them correct it. I am surprised because they are a reputable shop. A few weeks ago, when they replaced my rotors and pads, the mechanic took the initiative to clean and paint my calipers black before putting everything back together, for free.
Thanks again for the replies.

 

The fuel filter is held in place by a plastic strap. That strap is hard as heck to break off properly. So the person who installed it may have broken it (but should have still zip tied it together). It should not be hanging, that's for sure. It should be wedged between the gas tank and if I'm not mistaken, the frame of the car.

 

I ordered the BOSCH filter and washers from ECS, shipped(2nd day) for ~$40 bucks.
hope it gets here tomorrow (my day off)