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STOP alarm in 2000 Passat Wagon

I drive a 2000 Passat station wagon (mom-mobile). I was on the freeway in stop and go traffic when suddenly an alarm went off and blinking lights appeared that said ?Stop? with a picture of an oil can. Just then, traffic stopped and by the time I was able to get to the side of the road, the lights and alarm stopped. I drove home without incident.

The next day, I took the car to the mechanic who told me that it was most likely a gunked up oil screen, but it could only be fixed by replacing the oil pan ($1200 ? not covered by my extended warrantee). However, he couldn?t be sure that was it.

Have you heard of this issue? What would you do? The car isn?t in great shape, so I?m loathe to put in that type of work.