It sounds like the anti trap mechanism has failed - either the electronics (unlikley) or the hall sensors in the motor (more likely and assuming the motor has hall sensors).
There is usually an over-ride system for getting the window all the way up (via the outside lock by the sounds of it). Consult the owners manual for an interior over-ride method (there might not be one for safety reasons).
most likely you need a new motor (if VW have ordaned that the motor can be split from the regulator). You'll probably only get a full regulator secondhand (the car won't be worth the price of a new one from the dealer).
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