I'm sure no expert, but I just took my 01 Passat in for what sounds like a similar problem...VW told me it was an issue with the cam tensioner (non-VW employed mechanic diagnosed cam lifter). Mine makes a small sound on startup, goes away until the engine is warm and then just really goes to town with that noise.
If I HAVE to drive it someplace and I don't want people to look at me like my car is about to blow up, I have to shift into neutral at the stoplight, rev the engine, then slide back into drive. I hate to leave my baby in the driveway, but I can just imagine what else I'd destroy by driving it before it gets fixed. Cost for tensioner replacement at VW service? $1222.
Good luck with yours, I hope it ends up being much more simple and less expensive than mine.