Damn! gear oil in your tranny? well this is where my knowledge runs out. post this up on audizine under the b5 s4 section and they should have some answers for you.

Are you sure its gear oil? how is your rear main seal?

 

Maybe it just smells like burnt gear oil?

 

Replaced the tcm, problem solved. Thanks for your input man I really appreciate it. Can't wait to swap in a 6 speed now