Thanks for the ideas.

When the sensor is unplugged, the system reads 0 degrees. Just unplugged it and it made no difference. Also tried a different climate control unit and it was the same.

I was about to try setting one side to Lo and the other to Hi when the two sides synchronised with each other??? Now I can't find out how to turn it off. My A6 has this function but as soon as you adjust the passenger side, it resets. Any ideas?

I have heat!

Managed to get a few mins with the Master Tech at Audi Teesside who although couldn't tell me exactly what was wrong, he did explain exactly how the system works and how the temperature is controlled.

Came home and had a good scratch of the head. I decided to blast the heater cores through at the bulk head. I've already done a system flush but I don't think it can get everything out. Firstly used an air line and out came a fair bit of gunk then attached a hose and thoroughly flushed it. All sorted, I have heat!

Turned out most of the symptoms were just because the system was confused by the sensor readings as only the bottom 1/3 of the heater core was getting warm. Now everything works as it should.

Always good to see a successful (and cheap!) solution. Outright failure of an item is (usually) relatively easy to diagnose but, as with your case a partial failure can be very difficult to get to the bottom of. +++

Did you figure out how the two sides synced, as it's one thing I'd like to do on mine, since I'm the only one in the car for 99.9% of the time, and during the other 0.1%, my mum doesn't fiddle with the settings. I knew how to do it on the A4, but the same trick doesn't work on the A8.

I didn't unfortunately. I'm wondering if it was like a fail safe when the climate control detected a problem. When I went back to it in the morning, the sync had turned off.