I ended up taking it apart and identifying the release solenoid as the culprit. The new part was $41.11 + $9.50 S&H from GAP. A week later the part arrived and it took about 20 minutes to replace.

I thought I could follow the procedure: http://www.audizine.com/forum/showth...ty-Trunk-Latch
But, the steps weren't the same for my 2004 S4 saloon. The latch was also different and not interchangeable. It appears that the newer latches have the release solenoid built into the latch. In my car, the units are separate.











Couple of different views of the latch as a reference when you put it back together.


Removing the solenoid






New on the left, old on the right. Transfer the bracket using a T25 torx driver.


After this, it all goes back together. The orientation of the metal rod was a little confusing since it's not keyed on either end. Once I got the ends in the right orientation, it worked out fine. The metal rod snaps into the solenoid first then you snake it through the trunk bracing to the latch.
All together, it's probably a 35-45 minute job your first time and 20 minutes if you've done it before.
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