Mechanic blew up my wife's car...who is to blame?

Definitely their liable for this. Demand reimbursement for a new engine, or take legal action if they refuse.

If your VW tensioner is like my older VW tensioner then it would be easy to install the tensioner on backwards. If this is the case, the tensioner would not turn as the outer rim of the tensioner would be held tightly against the block. There is also a risk of weakening the sheet metal riveting holding the tensioner together if it is installed backwards.

If a mechanic did this, it would be a simple matter to not say anything and to reverse the tensioner to install it correctly. He might not even realize that he may have damaged the tensioner.

The tensioner has two holes in the hub for belt tension setting but he might not have that tool and would simply use his hand to set the tension as I have been doing with my car when I change timing belts. If this is what he did, he might not have had the holes in mind, ignored them, not realizing that he put the tensioner on backwards.

All of this could easily be swept under the rug by the mechanic and instead, blame the problem on a bad part. Others in the business, if present, such as a service writer or general manager would likely not know about this detail unless they had experience changing timing belts on a VW.

Either way, the shop owes you a replacement engine. They recommended the work, did the work, and the engine died due to a part they worked on. They should foot the bill for the engine. StrongDreamsWaitHere is exactly correct. This is an easy claim in small claims court, if it goes that far.