Had all the usual problems with the lights dimming and steering cutting out on my 2000 1.4MPI. I've done some repairs to wiring around the battery area but not joy. Out today and finally the power steering failed and would not come back to life. Checked the car with VAG-COM software and it said the sensor was short to +, so I popped the sensor out with the plan to get a new one. On removing it some power steering fluid came out and the sensor was soaked in fluid. Is this normal or is the steering gear shot? Anyone got any thoughts?

Sounds like your steering rack may be leaking.