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Does the dash PRNDL display the gear you are in, or are they all highlighted? It sounds like you have the usual (water under the passenger carpet. Slide the passenger seat all the way back, remove the door kick panel trim, and lift the carpet enough to reach under and see if there is water. Slide the black box forward and pull it out, the harness is long enough to get out from under the carpet. Open it and see if you have water, check the connector pins.
There was a recall/update on a lot of these, 99 was an early year so I don't think it applied but you can call the dealer with your VIN and ask if there are any recalls open. If the P9 is open, tell them your issue and make them cover it under recall extension. Otherwise you may have to buy a new TCM
The check engine light typically only comes on when there is an engine or torque related issue. VWs have a separate Engine control module and Transmission control module, not like an American car which typically combines the two. So if the PRNDL is all highlighted, there will definitely be faults stored in the TCM.
Fluid will not set a fault.
It's possible that it is the multi-function switch on the side of the transmission, behind the rear motor mount, that sends an electrical signal that tells the computer which gear is manually selected by the position of the lever/cable