The 4.2 S5 is solid, with some known issues that are expected to happen to most cars at one point or another, and some sooner than later. Most of the commonly known issues have been mentioned above, and they are relatively minor compared to what I would consider real issues. Here is a comprehensive list, and I will indicate which I have experienced myself on my 2010:
1) sunroof screen tears from the sliding mechanism - I had this problem. Ordered the replacement part and replaced it myself. $265 for the part if I recall correctly.
2) start/stop button's writing flakes off - I had this problem, and simply replaced it with the updated, better looking red-ring start/stop button. $65 for the part and a very easy DIY.
3) worn/torn front suspension bushings - I had this problem at around 48k miles; mainly the trailing lower control arms, which have hydraulic bushings, fail after the bushings break and leak. As a result, I replaced ALL of my control arms (upper and lower, bushings, ball joints). An OEM kit can be put together for around $800 while shopping from different vendors. I have a detailed thread on this topic, with part numbers, vendor sites, etc. Also, the sites address which bushing sizes are the appropriate ones based on when the car was built - which was reported as a concern above.
4) supposedly the coolant overflow reservoir has a tendency to turn brittle and crack - I have not had this issue, but it is a simple DIY if/when it happens, and not expensive.
5) engine mounts fail at around 50k miles - I had this problem as well. Like the trailing lower control arms, the engine mounts are hydraulic/fluid-filled. These also tear and leak, causing powertrain play. I went ahead and had mine replaced with the 034 65-durometer solid mounts (the OEM ones are made of 45-durometer rubber), which feel great, and will not break and leak given their solid nature. The mounts go for about $400, however, I purchased my set during a promotion and got it for around $300. Another advantage about these mounts is that they can be purchased individually if/when they fail in the future; they do not need to be purchased in pairs.
***6) the carbon cleanup issue is overinflated for the 4.2 S5 engine. The RS4's v8 had the real predominant issues, often requiring cleanings every 10,000-20,000 miles. That is not the case with the S5's engine. So even though this may become an issue for a low percentage of owners in the future, it is not common. The trick is to stick with the highest octane fuel possible, open up the car every now and then letting that engine breathe, and avoid short trips when the car is cold. Some techs claim that the length of time for which the engine is run after it has cooled down entirely has an effect on the carbon build up. Even when the coolant temperature gauge is sitting at half, they recommend for the car to run for at least 10-15 minutes, ensuring that the oil has reached operating temperature.***
Other than the items listed above, the 4.2 on these cars was Audi's bread and butter for a while, and it's basically a bulletproof engine. If you take care of it, it will take care of you.
Best of luck. If you end up acquiring the car, you will love it. It is heavy, yet feels balanced, and the rumble of the 4.2 is amazing (specially when paired with a nice exhaust).
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