One problem related to engine grinding noise has been reported for the 1998 Volkswagen Passat. The most recently reported issues are listed below.
Lower control arms need to be replaced due to corrosion/rust even though the car is only 2 and 1/2 years old! makes horrible creaking/grinding sound. Dealer/service dept. Said it wouldn't affect my driving and was safe but after reading information on this website and others I'm not so sure. Read that this is a faulty/defective part and I should think that vw would replace it without me having to pay $300 per arm!.