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Maybe the diff if the speedo is bouncing...
Especially if it only does it when in a straight line or turning one way..
Ive never owned a Quattro but on another car Ive owned this was how my diff was when starting to wear.I added Lubegard,available from oregonperformancetransmissions on ebay.It is not a bodge,that particular transmission shop in the States are highly recognised and recommend using it as an alternative to immediate/expensive replacement.
Alternatively,try checking the CV joint.
Just my twopenneth worth!
Steve
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Mercedes E220 Sportline Coupe
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