So, can anyone tell me what this is? Its in the hood, coming out of the electrics somewhere near the fuse box. Might even trace back to the fusebox. Neither myself nor himself knows what it is. Himself is good with cars, so I am obviously not going to have ANY idea.

Doesn't look VW from that angle, can you get a better pic of the (assuming) electrical side/connection?

It's not the back part of a fan switch or something is it?

It's a speed sensor similar to this one.
car might have had a digitial speedo or cruise control at one point in time

Hella speedo reverse light switch, contacts close when you back up and turn the reverse lights on.

Aha, 57oval. That would make sense of why the reverse light didn't work. We took it off to pass the pitts. What would we need to get it all reattached and working?

Does that mean the reverse lights come on after you start travelling in reverse? Rather than come on when you select reverse gear?