My 96 2.8 quattro auto will not move when in drive. The Rpms just climb. When I put it into 2nd gear thru Drive it works fine until I come to a complete stop.

I'm pretty sure the clutch packs are gone on 1st gear. Is there anything else it may be?

 

Edit: didn't read it all... what you suggest sounds likely.

 

the magnetic switch that reads where the stick is under the shift boot is a common problem. sounds exactly like what you are describing.