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I have a 2000 Beetle with the 2.0 and recently had the key fail. The system went into lock down state and the key would not recognize. I used the following process to force the key alive again:

RFID chip uses an excited circuit to energize. If the crystals inside are "jammed" it will not generate and trasmit the information. Tap the area of the chip with a screwdriver or similar, do not beat it! tapping on both sides.

On the door remote (if you do not have one you cannot continue) push the unlock button then push the unlock and lock at the same time and hold. The car will respond in time either by flashing the lights, horn or door locks popping (mine popped lock then unlock).

Immediately put the key in the ignition and turn to start.

Mine took about 5 tries but it did come alive again. I am testing it again today to see if the fix held after carrying the key and leaving the car overnight.
 

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I don't see how the crystals could get jammed. The way I see it, the chip is either working or not. I don't think tapping it can free it up.

Good work getting it started thoguh.
 
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