Repair or replace -- newbie needs advice

Hi tdi friends and fans. I'm new to the site, and really need some cogent advice:

BACKGROUND: I'm the original owner of a 2002 VW Jetta tdi, manual transmission. It's been my daily driver since I bought it new in '02. It has 130,000 miles and has had all scheduled maintenance, as well as a few repairs along the way, including a replaced fuel pump & timing belt at ~45000; a new clutch, starter, brakes, front end & suspension at ~110,000. I really love the car, and don't really want to trade it in on something new, but...

PROBLEMS:Recently I noticed difficult shifting in and out of 2nd gear, with some grinding. I basically avoided it by shifting 1st to 3rd. But I was going up a hill and had to use 2nd gear, there was a lot of metallic grinding, a sound like something broke loose, a lot more grinding and inability to shift gears at all. I can hear chunks of metal rattling around in my transmission. I'm sure I've got transmission issues. Also, for the past probably 10,000 miles, it was driving very sluggish, and I stopped hearing the turbo engage at all. Tried cleaning the MAF sensor, replace air filter, etc, but no change. So, I think I need some work on the turbo etc.

QUESTIONS: I know that I am facing major repair costs (transmission, turbo, etc.) First I have the age old question--should I sink money into an older car to keep it running, or go with something new? With the recent VW dieselgate, I've been told by new car dealers that the trade in value is nil. Not sure what the used market might be for a car with a bum transmission? Its difficult to do a cost assessment since I don't know the exact amount of repairs either. My heart says keep it and fix it, but my head says these kind of expensive repairs are going to continue to add up. If it was you, would you fix it or walk away now?

Assuming I could come up, with roughly $4-5,000, what can I do to the car to insure I can keep driving it for a few more years? What mods should I consider? I've heard of replacing the injector nozzles for larger gauge, aftermarket ECU chips, upgraded turbo, etc. Considering that my transmission will need to be rebuilt/replaced, should I consider a different clutch, since some of these mods would increase torque? Should I replace the standard gears for ones with better ratios (is this possible)? Also, how should I go about diagnosing the turbo? Maybe I just need a wastegate cleaning, or the games are seized or something like that? Should I add a boost gauge to monitor turbo function? Air filter/exhaust/intake manifold? I don't give a damn about cosmetics like stupid LED running lights, just mechanical/performance-related stuff.

Basically, I'm trying to decide whether to repair or not (leaning towards yes). Secondly, starting from stock, and knowing that, at a minimum, the transmission must be repaired, what should I modify/replace/repair to increase performance (within reason, I'm not drag racing the damn thing) and insure a few more years of driving life for ~$4-5000?

Thanks

I'd fix it. That bit about the 0 trade-in value is bunk, as a general statement.
Is it possible the metal bits in transmission could be a failing DMF?
The weak power could be the turbo, but often it's just the controls, frozen actuator, even just bad vacuum tubes, etc.
So diagnosis is everything. Find the best TDI mechanic you can, at least for evaluation.

At 130k miles the running gear has many miles of service life remaining.
Whether to repair and improve your Jetta would depend on the body's condition.
A tune and possibly bigger nozzles will make it feel like a new car once the
probably minor low power issues are taken care of.

If you decide to get rid of your car please don't trade it in put it for sale in the classifieds here on the forum. A dealer might give you $500 for it and you have a car that's hardly been driven. If the body is in good shape everything else can be fixed relatively inexpensively.

Look you’ve got a hugely biased audience that you are asking. (Self-included) Based on your post I’m assuming you are paying someone else to do this work? Then I’d say no, it’s unlikely the best use of your money. Look on eBay/here for what similar cars without these issues are selling for. It’s unlikely you’d recoup what you put into it. In which case, you might wanna consider buying one where someone else has already fixed it up

You need to find a trusted TDI mechanic. Most here would jump at the chance to pickup an ALH with a manual that has only 130k miles. Its odd that you had the clutch replaced at 110k miles and now you have problems with it. Either you are hard on your clutches with your driving style or it was a defective product. Maybe they did not use a quality product. Your power issue could be a lot of things but may not be expensive. I had similar issues with mine once and all it needed was a new MAF, about $60 and an easy fix.

What year did the ip and timing belt work get done? The timing belt to me is the biggest concern here... Like a ticking bomb since it was changed at 45k and you have 130k now on the car but the car is 16-17 years old. The timing belts are good for 100k but typically within a 5 year span since like tires and other things with rubber compound crack and go bad after that amount of time. Transmission wise I would get a good used replacement and motor on.

Update: Fix or Sell

First, I want to thank everyone who responded. Based on advice, I decided to find an experienced mechanic and have things fixed. I found a guy through the forums in my area (Hudson Valley, NY, NE PA area) Please PM me for contact details. He is a phenomenal person/mechanic, and I now consider him a real friend and would recommend him to anyone.
First: I asked him to go over car with fine toothed comb. He did and found the following:
1) Broken gear teeth in gear box
2) Suspension issues: Sway bar bushings, tie rods, control arm bushing, rear coil springs.
3) Bad thermostat and cooling fan control module,
4) Recently replaced clutch was scorched (probably my driving style/my daughter is also a young driver learning to drive a manual transmission/poor-quality replacement @118000 miles.
5) Intake manifold constriction 75%
In all, I had him do the following repairs:
1) replace the clutch with a beefier, single mass flywheel in order to support other upgrades
2) fix all suspension issues
3) clean manifold and return stock, VNT15 turbo for proper function
4) new injectors to .216 Bosio
5) Replace thermostat and cooling fan control module
6) Reprogram ECU to performance tune with new injectors (and newer clutch to accommodate performance improvements)
Total bill was $2600 parts and labor. I feel like she's good to go for another 1000000 miles. Glad I decided to trust advice here and get her repaired. And now, with bigger nozzles, and ECU tune, it's vastly peppier and still great mpg!

These mk4’s are perhaps the best diesel cars vw ever built. Maybe the best cars ever built, period. I’m glad to hear you kept and fixed it.

You did very well, OP, and you made good decisions.

Now pull up your maintenance schedule and stick to it! When's the timing belt service due? Have you flushed and inspected/lubed your brake parts any in the last few years?

Rinse, repeat...drive forever!

Excellent work, nice price on those repairs.
One thing I might recommend is to be sure the daughter takes her foot off the clutch pedal between gears.