SUCCESS!!! I was almost ready to give up (and I rarely fail in these projects), but I decided to try again. I made the regulator exactly as the last picture in post #470 in xcarlink tips and tricks thread. Radioshack people were clueless, but pointed me to the rack with components, $7 with tax gave me all the parts. I do have some wire at home, so this was not very difficult. I do have a degree in EE though . I connected both green wire and camera power supply to the output of the regulator, and reverse from the fuse to the input, and viola - all works with not a single drop of frame.
Oh, and of course, the same thread (post #432) solved my Bluetooth problem - after moving the plugs into new harness, and some tight fitting, all works. Now need to wait for the Vag cable, to get rid of a couple of fault codes.
If someone lives in Chicago/NW Indiana/Milwaukee WI area, I can suggest the same installer. After my car, it should be a breeze. Inexpensive too. But I would not recommend someone without electric/electronic experience or not handy, making this regulator.
Thanks for all the help!