I've got two mates with mk2 Octavias (one VRS and one 4x4) and both have had failures of their traction control modules. One got it fixed under warranty (although the car was two months outside warranty) and the other had to pay 50% even though his VRS was only just outside warranty.

Is this a common problem with the mark2? Is it something that is now resolved in newer models?

Look for the ABS unit thread, very common.