Firstly, props on including your year and engine. So many people forget that stuff, makes it hard.
I'd check your fuses. Specifically fuse #29 or #32. I'm thinking you lost power to the coil packs due to a short in the coil pack harness.
Do you get fuel or injector pulse while cranking (are the plugs wet)?
Cracked insulation is caused by heat damage. Those wires put up with extreme heat from the engine and turbocharger. You can buy a repair harness that is premade or buy the coil pack connector pigtails and with a little work fab up your own.
There was a TSB issued for the transverse cars (Jetta 1.8T, etc) from VW that described the official fix:
http://www.squarewave.com/army/andre...b.97-04-02.pdf
Here is the Jetta replacement harness which can be retrofitted for the A4 (probably the best solution at $50!):
http://www.ecstuning.com/Volkswagen-...arness/ES7679/
Or an aftermarket solution:
http://www.034motorsport.com/ignitio...l-p-19338.html
Or another aftermarket solution:
http://uspmotorsports.com/product_in...roducts_id=500
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