Is there a fail safe mode on manual VW transmissions?

No.

There is absolutely no sensor on the manual transmission fluid.

But there is also almost nothing that can leak badly from a manual transmission.

If the final drive seals go bad, (and they only cost $5 and take a half hour to change), then you would still only loose less than a forth of the fluid in the transaxle.

Why do you think there is any problem with your manual transaxle?

It is nearly impossible.

It sounds like they were trying to scare you into unnecessary work.

Not for the transmission. some do use the oil pressure for the engine, but the transmission there isnt any fail safe. Possibly you locked up the front part of the transmission if it got too hot. Should have listen to the dealership

But it being an manual tranny, I think you have other issues with the battery. Manual tranny wont neccessarly lock up without something going through the side of the case.

There are usually sensors for low oil and fluid but i dont think there are one the manual transmissions

Please verify the o2 sensor manually, make valuable it tight and in reliable connection. a foul connection would reason an blunders examining to it. If all reliable, then replace the o2 sensor. On some motor vehicle with digital administration transmission, any fail to the engine would inflicting the laptop to command the transmission to artwork basically in some subject to avert a some distance better harm. Beside the o2 sensor, please have verify to the gasoline rigidity to have prevalent rigidity that would desire to be injected. it would desire to be the gasoline rigidity or the gasoline rail that doesn't stored adequate gasoline in it to be waiting to inject.