There is the issue, is should read K1: OK. Most of the time this is due to an aftermarket radio (as noted above). We have more information on this on our web site:
http://www.ross-tech.com/vag-com/aftermarket-radio.html
The short version... is terminal #3 of the black power plug on connected to the aftermarket radio wiring harness? If so, cut the wire on the aftermarket radio harness and tape it off.
Just to clarify, registered Ross Tech customers can contact Ross Tech directly for support. If a Ross Tech customer loans his interface to a friend, that is fine, but said friend is not a Ross Tech customers and does not qualify for support directly from Ross Tech (phone or email).
Registered users can get free product support directly from Ross Tech over the phone. Product support is to help our customers to get the software and hardware up and running so they can communicate with a vehicle (this OP's issue here would fall under product support). Anything beyond that is vehicle support, which is a fee based service over the phone. Ross Tech still has free support for our customers via email.
Questions on forums like this, we don't mind helping out some one who is borrowing an interface from one of our customers. We hope that people will see the value in being a Ross Tech customer (in terms of support and the product itself) and make the small investment to purchase the best tool on the market. [/small sales pitch off]