With your help and after reading the following article, it looks like i (at least temporarily) fiexed the problem. This morning, the light does not flash, although it is still on.
What I did is to check the cable/wire for cylinder#5 and found it is loosed.
Thanks all and I will keep you updated after I clear the code.
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This is a proper DTC. I think (though I am not sure) that misfires are detected by measuring small deviances in engine speed and calculating the cylinder at fault from other engine data. Note that if you are seeing a misfire on only one cylinder, the cause you are looking for is specific to that cylinder. It could be mechanical such as valve problems. It could be a faulty injector. It could be a bad plug or shorted ignition wire. It is unlikely to be any further up the engine management chain than that. The coil in this car is a set of three double ended coils. They fire the cylinders in pairs: 1/6, 3/4, and 5/2. So if it was the coil you would likely see misfires on cylinder 5 as well.
Given that, I'd examine and maybe even try swapping out the plug and wire on cylinder 2. Also run a compression test. Then test the fuel injectors.
Having the Bentley manual - probably the CD version - is a necessity. Having access to a VW scan tool or VAG-COM is very helpfull. With that, you can run the car and monitor the cylinders and see the misfire counts in real-time. Indispensible to tell if it is really fixed. And it enables you to run the fuel system and injector tests.
Last summer I had the experience of debugging misfire codes on my daughters 2.0L. You might find some of the information in that discussion usefull along the way:
http://tech.bentleypublishers.com/thread.jspa?forumID=52&threadID=10326&messageID=78001#78001
http://tech.bentleypublishers.com/thread.jspa?messageID=114214
http://tech.bentleypublishers.com/thread.jspa?forumID=52&threadID=10326&messageID=78001#78001