The engineering: Audi made these e-brakes "self-adjusting" in that there is a swivel at the base of the handle that rotates left/right to ensure an equal and firm pull and release. The cables are steel braided wires with a thick plastic/composite "sheath". If the sheath cracks, tears, etc, the steel cable gets exposed to the elements and rusts/frays inside the sheath. Thus freezing the cable in place. On the rear brake assembly is a spring loaded e-braking mechanism but it doesn't have enough strength to retract a frozen cable when the e-brake handle is released.
Although only one cable is replaced in this DIY, it is recommended that if you replace one, you might as well replace the other. The cables only cost about $45/each.
Here's what the adjuster and rear brake is supposed to look like when functional:
Note the two "hooks" are pretty much even and the "hoops" are the ends of the brake cables. When pulling/releasing the brake, these hoops should move equally and simultaneously front and back. When one freezes, the adjuster attempts to correct this and rotates the opposite way to the extent that the good cable hoop falls off the hook and will disengage the e-brake system.


The tools:


Time: It shouldn't take you more than 2 hours if you are mechanically inclined. This really isn't that hard.
Disclaimer: When in doubt, take your car to a certified mechanic and have this done professionally. Always use proper safety equipment to include eye protection (underbody debris WILL fall in your face) and never work under a car without jackstands or some way of definitively preventing the vehicle from falling. You will not survive a crush injury if these cars fall on you.
The DIY:
First remove the rear tire of the side affected. In this case, the left side cable.
Note the coiled c-spring and brake cable with retention c-clip and retaining ball at the end.

Next go inside the car, slide all the seats forward and incline seats as much as possible to allow enough working room. Grab a seat in the center rear seat and remove the ashtray

Remove the lock button plate from the console and disconnect. This is done by sticking your fingers on both sides and feeling the retaining tabs. Push both these tabs outward and the plate should fall out.

This should give you unabated access to the armrest bolt and aluminum guide plate under it

Remove the center bolt and the arm rest comes out of the top

Reach under the console and push on the bottom of the pocket. The floor plate pops out and reveals a suspicious looking hole. Inside that hole, locate another bolt that secures the front of the guide plate. Remove it


Next remove the two rear bolts on the guide plate to reveal the back of the e-brake handle (adjuster) and the dysfunctional cable hoops. Make sure the cable requiring replacement is no longer hooked on the adjuster.


Note the seized cable on the left. The left side of the adjuster does not move and overcompensates by rotating in opposite directions causing the good cable to "pop" off.

At the rear wheel area, note the little notch at the top of the spring groove. Move the bottom part of the spring up to that notch so that the top part of the spring lines up with the hole and release/remove the spring.
Note: Keep in mind when the spring is compressed, it IS under tension so be careful as to not to catch it in the face if it slips out of your hands

Follow the cable until you see a metal bracket (it's bolted to the lower control arm) securing the seized cable with a retaining clip. Unbolt the two bolts with a 13mm socket wrench and continue forward.

Note that the cable continues forward under a heat shield. Unbolt the heat shield and to reveal the next two retaining clips. The cable can be popped out of the clips instead of unbolting the clips altogether.
NOTE: The heat shield nuts do not hold up to weathering at all and may be extremely rusted. It is recommended to have replacement nuts and screws available.


Continuing forward, note the next plastic retaining clip. The clip is black plastic and wraps around the entire cable. These clips open towards the middle of the vehicle. Meaning that if you are on the left (driver's side) cable, the clip opens at the right side and if you are on the right cable, the clip opens on the left side. These clips may be difficult to remove without breaking.
Tip: Use a flat screw driver and place it between the cable and clip. Rotate the screwdriver counter-clockwise (if on the left clip / rotate clockwise if on the passenger side clip) to create a separation big enough to allow another screwdriver in and pop it open.

The next step is optional for AWD owners, but may aid in opening the workspace up and give a better view of the area at hand.
Pop out the black plastic retaining clips at the back of the center heat shield that covers the center exhaust section. The two bolts on the front of the shield actually secure the center driveshaft support bearing (wraps around the shaft to stabilize). When you undo the bolts, the drive shaft will loosen slightly and want to fall down. I held onto the shaft until the heatshield was removed and then loosely threaded the bolts back to prevent the shaft from hanging loosely as I worked.


After removing the cable from the wraparound retaining clip, give the cable a good pull and it will pop out of the back of the console. Then walk it out towards the back. After removing the cable, inspect and compare the new cable to the old. The new cable will allow easy manipulation of the cable back and forth in the cable. The old will be seized and ready for the trash bin.


REASSEMBLY:
Slide the new cable in the way the old one came out.
TIP: Place a big bright lamp over the back of the console. This will illuminate the hole from the inside and allow an easy guiding of the new cable from underneath the vehicle.

Once the cable finds the spot, push hard on the cable until it pops in. Then secure it in the wraparound clip. Return to the rear end of the cable and manipulate the cable forward inside the sheath. This will push the hoop forward. Go back inside the car and secure the hoop to the adjuster hook. This ensures the cable stays put while installing the rest of the cable.
Work backwards until all that remains is securing the back end of the cable (the retention ball). Before attempting to place the ball, go back inside the car and ensure the cable hoops are installed onto the e-brake adjuster hooks and the e-brake handle is down (disengaged).
Finally, place the retention ball. This may take a bit of effort, but it's still much easier than trying to hook both of the hoops on the adjuster while both are under tension. Replace spring, retaining c-clip, and double check your work.

Mount your wheel, remove your jacks, and lower the car back down.
Enjoy the glory that is now a working e-brake and reassemble the center console.

Hope this helps someone. Thanks for reading.
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