I would bet money on a stg 2 1.8T owning a VR6.
Almost every single car produced is TUNED for understeer. Audi's do this more than others because they usually have the engine in front of the front axle, which is not ideal. HOWEVER, Audi has done wonders making their cars handle well, even stock. And comparing an AWD sports coupe to a true sports car (350Z) isn't exactly fair.
The 225 weighs 3200lbs, with AWD. Add an aftermarket suspension to the TT, and they handle VERY well, rotating the rear easily.
I don't think the S-line came out on the Entire Audi line until 04. The A4 had the ultrasport, the A6 S-line and TT 3.2.
DSG is great, but 99% of the time its like driving a regular auto. Great when driving it hard, and great when tired, but boring as hell 99% of the time. Its actually exactly the opposite of what you said. DSG is great in the twisties, but boring everywhere else.
Not sure on the early DSG issues. Pretty sure the programming is different, but the actual trans is the same one used until the new wet clutch designs in the 2010 S4's.