Engine died while at a stoplight

I'm happy you came here first.

First of all, you have to understand that spark and injector pulses occur at very precise times based on a few sensor signals, so when a sensor fails, the Engine Computer has no idea when those events should occur. With no spark and / or no fuel, the engine is going to stall and you'll have a crank / no-start as you described. In addition the two most critical sensors often fail by becoming heat-sensitive, then they cool down and work again an hour later, just as happened to your engine.

Second, the mechanic would have no idea where to start looking for the cause except for the diagnostic fault codes. This is especially true of intermittent problems. Once the engine will start and run again, there is no defect to be found, but that fault code will stay in memory for a while. At that point is is very important to not disconnect the battery or let it run dead because that will erase the code(s), then that valuable information will be lost. Your only option then is to drive the car some more until the engine stalls and leaves you sitting in traffic again.

The third point of great importance is to list the exact fault code number. To say a sensor is "problematic" is better than saying, "it's bad", as too many people do. You must understand that fault codes never say a part is bad or needs to be replaced. They only indicate the circuit or system that needs to be diagnosed further, or the unacceptable operating condition. When a part is referenced in a fault code, it is actually the cause of that code about half of the time. First the mechanic will inspect the wiring and connectors, then perform tests to rule everything out except that part.

There's well over 2,000 potential diagnostic fault codes and there can be a dozen related to just one sensor, but they mean very different things. That's why I need the exact code number and not just a generic description. The typical culprits are the crankshaft position sensor and the camshaft position sensor. A failure of either one of these will cause engine stalling, and these both commonly do fail when hot and start working again when they cool down.

Fourth, there's 12 different engines available for your car model. Three are V-6s, one's a diesel, and one has a turbocharger. They all have very different systems and sensors. When you have an engine-related problem, you have to list the engine size in your car.

Fifth, I have some concerns about the costs you were quoted. I'm more familiar with parts for domestic cars. A crankshaft position sensor for the typical Chrysler products costs around $20.00 or less, but that manufacturer is near the top of the list of those with "customer-friendly" business practices. VW is near the bottom of that list. The same sensor for a 2.8L gas engine can cost well over $100.00, depending on where you look and the supplier, so $209.00 to replace it could be about right. The problem is though, did the mechanic actually diagnose this as a defective sensor or is he just going according to the code? If he's just going by the code, there's a 50 percent chance he sticks a new sensor on, and the problem occurs again later. Some mechanics choose to spend your money on the part first because that costs less than an hour of diagnostic time, but YOU'RE the one who is going to test it to find out if the problem is solved, and that could leave you stranded on the side of the road again. Most people get upset about having spent money on parts that didn't solve the problem, but they get real angry at having to take the time to the car back to the shop a second time for more diagnostic work.

"$1,000 to replace the entire system" is way out-of-line. You do not replace an entire system to solve a misfire problem. You diagnose the cause, then repair it by replacing only the defective parts and sometimes some parts related to it. Why would you replace all the rest of the parts in the system if there's nothing wrong with them? The misfire could be caused by worn spark plugs and wires, so that's what you'd replace. You could do that four or five times for a thousand bucks. Low flow from an injector can cause a misfire too. The fact they gave you any estimate suggests they already know what's wrong, so why would they not just replace the few parts that are needed?

Also consider that a misfire code could potentially be set due to the failing sensor. I'd have the sensor circuit diagnosed, and / or the sensor replaced first. The mechanic will record the fault code numbers for future reference, then erase them. If a misfire is detected again later, the Engine Computer will set the appropriate fault code and turn on the Check Engine light. If that doesn't happen, you'll have saved the cost of that part of the repair. If a misfire does show up and more repairs are needed, you won't be out any more than if you originally had the problem repaired.

P0300 - Random/Multiple Cylinder Misfire Detected
P0301 - Cylinder 1 Misfire Detected
P0322 - Ignition/Distributor Engine Speed Input Circuit No Signal
P1237 - Fuel Pump Secondary Circuit Malfunction

I'd still start with the distributor / code 322 since that is the most likely thing to cause a heat-related intermittent stalling problem. Most mechanics will opt to replace the entire distributor with a professionally-rebuilt unit with a warranty, to insure the quality of the repair, but some will try to replace just the sensor if it's available separately. They're willing to risk their reputation and spend more time on labor in hopes of saving you money on the parts.