please! volkswagen jetta damage diagnose?

Juana1

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Please, look at this pictures of my car and tell me if this is bad, if I have to fix it right away and how much should it cost.
What happens if I don´t fix it?
shouldn´t this damage show in the dash lights?
They told me that it was a miracle, since the gear oil wasn´t leaking but I live in a third world country and don´t trust mechanics so I need assesment before they charge me the usd 1700 they are saying it costs!


http://www.flickr.com/photos/60498984@N06/5516972457/in/photostream/
 
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