your friend is having valve body issues with the transmission. I don't think the Year bug your friend has is covered under VW's revised warranty.... a somewhat poor excuse of a recall.
your best hope for getting any remaining life from the tranny, would be to change the oil and filter. I hate to be the bearer of bad news, but it sounds like the transmission is on the way out. my beetle experienced the same its use as your friend. shortly after sex extreme slippage, the transmission actually locked up in the middle of traffic. I would suggest to your friend, to start looking for a replacement transmission, or better yet do a 5 speed swap.
More info needed. Mileage, number of speeds the trans has.
It is most likely the valve body. They are pretty easy to remove if you can DIY.
Costs about $550 for a reman or reworked valve body, you could price a new one from VW as well??
If the trans pan is pulled and the problem was caught in time, check the magnets and make sure they are not FULL of metal shaving. All high mileage automatics will have metal on the magnets, but it is a matter of how much. I reworked the valve body in my 2003 6 speed Tiptronic at 70k miles as the valve body consumed itself.
VW did extend the warranty coverage for 7 years/100k miles on the many auto transmissions. It is not a recall. Recalls are safety related and usually NHTSA initiates these. VW realized there were a lot of problems and probably was trying to avoid bad press and class action lawsuits as well as tying to keep from hemorrhaging customers due to high repair expenses.