[Vwdiesel] Car totaled

[Travis .]

I went to start the car Monday morning. It was just as cold as the previous Monday morning. I work night shift so it was cold (-25, I have started as cold as -35 in montana). I tried it twice. It turned over but not fast enough to start. I went back inside to call my wife. Then someone offered to help jump me. Then my boss came in and said my car was running. This all took around 10 minutes. I ran outside and saw what appeared as white smoke or steam. Opened the hood and flames came out. Ran back inside and came back out (which took around a minute) with a Hologen extinguisher, opened the hood and put it out. 

Thinking the fuze block on top of the battery heated and started up. Pictures here http://s1203.photobucket.com/user/coalminer16/library/?sort=3&page=3

I have $500 deductible through Statefarm. They said car is worth $8298.50 minus my $500 is what I would get paid. I told them some of the things I did to the car (tinted windows, hitch - which they only gave $50 for, new tires - which need to be less then 1 month old I found out, etc). So basically they aren't giving me anything extra for adds on there  so I may be ripping things out. They said if I wanted I could find comparable vehicles but they had to be an 04 Golf within 500 miles and comparable miles. Well-there is only one that fits the bill that I can find, one more if you go outside the milage range at $9000 for a car with about 100K miles and $12000 for the other that is closer but has less options (and honestly I think is pretty high) both through craigslist. I can't find any others out there that match.

My car is a 2004 Golf GLS with cold weather package. Never mind my own adds.

They won't give me a price of buy back until I agree on a price of what it is worth. Only people telling my not to buy the car back is my extended family as they worry about working on electrical items. I do to but I know with a clean rust free body, working engine and tranny someone would have to buy it if I didn't mess with it even.

What would it be worth in it's current state if I did buy it back to resell. I likely will attempt fixing though but I want to make sure I can justify buying it and having it sit there while fixing as I am out a car that can drive well now until the rabbits can come back out when the salt comes off the roads. 

Any other tips/thoughts. I really can't complain about the price they are offering for the car. I do know they took car of my father on his motorcycle accident pretty good. but when he asked to buy it back (rebuild engine and added 6th gear in the tranny) the price was so high it wasn't worth it-the rest of the bike was junk. 

Travis