As far as I know there was no official VW Motorsport programme for the Corrado. The thing that possibly confuses the subject is the VW Motorsport branding that was on the Pierburg VSR inlets that were originally designed for the VR6 but were then pulled from the production cars. That protoype run of inlets is why there are 500 VSR's floating around in the world now - I used to have one.
The subject of Ken Lark's VW Cup car I can talk to, as I got to know Ken at the time the car was built and campaigned back then. The car was originally built ground up by an ex Brabham engineer named Gerry Bergstrom, who also built up the initial batch of blueprinted race engines by matching bits from a batch of around 6 road engines. The car interestingly also had a crash-box which made it pretty unique in the VW Cup in the early days.
The car was always quick and particularly so on the power circuits like Snetterton and Thruxton, but it's achilles heel seemed to be it's race starts where the long first gear frequently bogged it down and saw it swamped by competitors even though Ken was a frequent front row qualifier. A bunch of us were at Brands Hatch in 2000 when Ken & Gerry won thier first trophies and Ken was kind enough to bring the race car up to Donington in 2001 to the Corrado Club National Day and put in on display.
In 2003 a few of us went up to Snetterton for a charity day where rides were available and I was lucky enough to get a passenger ride in the car. With the engine power limited to around 240bhp under VW Cup regs it was sort-of fast in a straight line but under braking and around the bends it was a bloody monster. The thing had 380mm AP racing brakes and 10" wide tyres on it and even in the rain it shoved you hard into the belts under braking. There was a point were (through the spray) we came up behind a Ferrari 360 which was having the wheels driven off it and yet we were past it (on the outside as he drifted it) within just three bends.
Ken was a CCGB member throughout his campaign with the car and I believe his daughter is still batting around in a R32 engined Corrado. After Ken & Gerry parted company the car was maintained by a guy called Ian Fowler who still had (and may still have) a VW garage business somewhere around Welwyn Garden City. I believe Grant Motorsport started to prepare the engines in the later years which is where the livery comes into it.
After a number of fairly successful years with odd wins here & there the Corrado was eventually surpassed by newer cars, and in particular the R32 Golf derivatives. Interestingly a Corrado still competes in the VW Cup, in a series now almost completely comprised of new Sciroccos and Mk6 Golfs. VW has ensured that the older cars aren't particularly competitive anymore, which has slightly killed my interest in the series TBH. It used to be the mad diversity of models that contributed to the fun, although they still have a Caddy TDi racing in it.
Hope this is of interest. Ken is a terrific bloke and I think he was racing his old Vento VR6 in pre-90 saloons the last time I saw him