Hard Knock from Undercarrage
 

I believe my differential is causing a knocking sound. Has anyone had an issue like this before? is this a costly fix?

Front or rear of vehicle can it be heard?
Over bumps ?
When accelerating or decelerating?

Think we need more info to go on for help to be offered.

the knock is coming from the rear. it happens during acceleration after a gear change, sometimes if i accelerate quickly it will give me a slight knock as well

check your diff fluid and for shaft play. In my old tahoe after towing our boat the rear leaf springs streched and would produce a knocking/metal on metal sound. Granted that a tahoe is not an audi haha

I would check you center support bearing on the driveshaft. It will clunk on acceleration & shifting.

Don't forget to look for cracks in the subframe, missing bolts, or broken subframe mounts !
BMW e36 body styles are well known for this, seen it a few times on audi's as well

My center support bearing is on its way out :D

These quattro systems are basically LSD correct?

Rear diff mount. Replaced mine last year. If when you shift and stomp on it it sounds like the hooker in the trunk is kicking the floor boards that's it.

Got mine from Ringer-Racing.com super easy fix about 35 mins.

Thanks for the help guys