Well I finally took my back seat apart and sorta fixed mine...
I will try to take pictures this week of what I did, but basically here's what happened to me...
Like many people, I put my backseat down and it would not go back up because the seat belt was stuck. Well I NEEDED to use my seat so I forced the seat up. I then used a triple square bit (had to order them online. I couldn't find them at Home Depot, Lowes, Sears, Autozone, Discount Auto Parts, or Harbor Freight) to remove the bolt that holds the belt to the bottom of the car. I left it like this for many months. Finally it became an issue that we needed to use that 3rd seatbelt in the backseat so I set out to fix it.
Well ultimately my mistake was FORCING the seat up because that seemed to have broken the retractor. My Touareg is a 2004 so it's long since out of warranty, but I brought it by the dealership and showed it to my awesome customer service rep (Jimmy Gonzalez of Gunther VW in Fort Lauderale... Make sure you ask for him!). He brought out the Touareg master service rep from deep within the bowels of the service department. This guy told me how to remove the seat and get that seat belt out. Well it took me about a month and a half before I actually got up the nerve to do it...
To remove the rear seat backs from the car you need to put the seats forward and look at the gap between the seats. There you'll see a torx (25 maybe?) bolt that is easily removed. Remove the bolt and remove the metal piece it holds in. Put the seat back in the upright position, but down lock it back in. Pull up on it until it comes out of the little pocket it's in. Next move the seat about 1/4 to 1/3 of the way down and push the seat away from the doors. There's a metal rod with a "hook" end that holds the seat in. The seat should come right out and let you work on it.
OK here's where I really had to get my nerve up. The backing where the carpeting is does not move. You basically need to go around the edges and pry up the rubber strips that hold in the leather for the seats. I went all the way around and pried it up. It was surprisingly easy. The only tricky parts were the pieces of leather that were around the openings for the headrest and the seatbelt. You have to especially be careful with the leather around that seatbelt, I ended up tearing it a little. Once you do that, carefully pull the leather away from the seat back along with the foam padding. This will eventually reveal the single bolt (18mm I think) that holds the seatbelt in its slot. Undo it and remove it. In my case it was broken. No matter what angle it was in, it would no longer retract. I paid $139 with tax for a new one at the dealer. When I got home I nearly blew a gasket because it didn't retract either. When I got back to the dealer they showed me how it has to be at the correct angle and it will work. I confirmed the new one worked but my old one did not.
I installed the new seatbelt retractor and carefully tucked the rubber edges of the leather into the backrest. I reinstalled the seat and it retracted perfectly. One word of caution. Make sure the leather is properly reinstalled around the bottom edges. I didn't have the leather back on properly on one of the edges and couldn't get the seat back in properly. Once I fixed it, it went right back in.
Here's the biggest pain about the whole thing and really the reason the belt fails in the first place. It all has to do with the plastic pieces at the top of the belt. There are two pieces (part numbers 7L6-885-657-B-71N - $2.80 and 7L6-885-658-B-71N - $6.00) that fit in there to keep this from happening again. These parts work in conjunction with a plastic button on the seat belt to prevent it from retracting past a certain point. Once the belt retracts past that point, you'd better hope your seat isn't folded down.
Well honestly I tried to install these parts and failed miserably. They are currently "rigged" and are holding up, but they won't last for long. This is the one thing I can't figure out and will be heading back to the dealership for assistance. I've tried everything with them and have almost broken them a few times. If I do figure it out, or if I can watch them do it, I will reply with how it's done.
I know it'd be much nicer with pics but I didn't take any along the way. Hope this helps those do it yourselfers out there that are having this problem.