OK so I dismantled the Bailey DV30 and also did a bit of research this evening.
Looks like the o-ring / seal they use on the piston reacts with the lubricant that was put in at the factory and swells causing the piston to seize. Quite how long this has been going on I don't know but I'm pretty sure this is what has been causing my weird issues, hopefully it hasn't damaged anything.
Looks like Bosch have stopped making replacement diverter valves now and the original replacement from Porsche is a whopping £150!!!
I've spotted a Febi-Bilstein valve on ebay which is sold as being compatible with the Audi 1.8T engine but doesn't say anything about Porsche... and is much cheaper at between £40-50 new.
From what I can tell looks like Bailey may have gone out of business? their website is still up but says they were moving to a new website in 2013... also no other shops appear to sell them.
So looks like there are few options unless I want to buy an expensive Forge, Turbosmart or APR diverter valve or chance it with the Febi Bilstein for the Audi 1.8T...
