Yeah, ATF should be changed regularly, but in some cases stuff just breaks. All automatic transmissions have a potential for failure. They are just too complex and too fragile for their own good sometimes.
Our shop replaces a bunch of them in all kinds of cars all the time. It is just par for the course. And obviously the motoring public at large is willing to deal with this in order to not have to shift their own gears, because manuals are sadly going the way of the dodo. One of our fleet customers easily spends north of $15k every year just for the privilege of giving their driver's the "luxury" of not shifting their own gears. Heck, we had one guy have to replace the transmission in his Saturn Outook and his Honda Odyssey in the same year and then the next year the one in his Toyota Highlander died. All of them were AWD, too, making the replacement cost even higher. Not sure how a single household could withstand a ~$14k hit inside of 18 months like that (I know mine couldn't) but if there was ever a reason to swear off slushboxes forever, you'd think that would have been it!
As was mentioned above, the specific failure point inside may indeed be just one specific broken component. However, to disassemble the entire unit just to replace that one component is usually not the best course of action. That is why in situations like this, the whole transmission just gets rebuilt or replaced with a remanufactured one.
Luckily, Volkswagen's remanufactured units, which are done in Germany by ZF themselves (the folks who made the transmission in the first place) are actually not all that crazy expensive in the grand scheme of how much automatic transmissions cost, and they are complete so nothing needs to be changed over from the old one. They even come full of fluid. That is what we install here, and have good success with using them.
The other option is, and many people do this, is convert the car to a proper manual transmission. This of course involves more things than just swapping the gearbox. You need to install the clutch pedal and related bits, change the flywheel, axles, etc. and then need to change some software in some of the other modules to play nicely with the new manual box. And you need to source some of these items from outside the country, since no manual B5s with diesels were ever sold here and the gas transmissions, while they will bolt up, are not geared appropriately to take advantage of the BHW's monster torque.
Both my B5s will remain slushboxes as long as I can make them last, with regular fluid changes, because I'm of the camp of "if it ain't broke, don't fix it". But I despise automatic transmissions like poison, so if either of them so much as hiccups, I'll be converting to manual. However this may not be an option for a lot of people, as many prefer an automatic transmission.
