Hello Jappo
A mate's S1 recently went to the factory for a major service. All his fuel lines were replaced and he was told they were degrading from inside out. He was charged but is going to contest since you shouldn't have to replace fuel lines on a car after just 7 years.
On my S1 when I purchased I also had some smells in the boot, but after various tightening up of connections etc it seems to have gone.
Cheers