I did this repair on mine last summer. I wound up dropping down the rearmost fabric part of the headliner by just unhooking it for more room to work. That was all that needed to come down as far as the headliner goes. At the front part of the shock you have a pin that attaches the shock to the body and a clip that must be "tweaked" to remove the pin. All very close quarters work. The biggest pain for me was getting the pin back into the shock at the front. Get something to hold the hatch open for you while you're doing this. I used a 2 x 4.

Regarding your issue dtf, just before I bought my TE the P.O. was having the same problems as you and had the harness repaired at the driver's side hinge for the hatch. If'n I were you, I'd start there.

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Fourings

84 Audi Coupe GT with Turbo engine, EFI (buh-bye CIS), Jamex seats, Koni's/H&R's, e-code lights. 210k and counting.
1992 Anthracite 400E, 161k, "Grey Ghost".
1986 VW Quantum Syncro, 192k, gone to the crusher in the sky.
1989 300TE 172k. (Was mine, now also Mom's car)
72 280SE 4.5 (Mom's car)