There is an immobiliser transponder in the key which you will need to get coded to the car, as well as having the blade cut. Your car is Immo 1 which has the immobiliser box under the dash. You'll need to get the pin number (SKC) from the box in order to program a new key - there are a number of tools which can do this such as VAG-Tacho.
Any Immo1 compatible key will work. Early A4 and A6, late Audi 80 and C4 A6 all used Immo1 as well so a blank suitable for those should also work with yours.
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