I swapped the engine of my 1998 A4 1.8T quattro manual into a FWD manual 1998 Passat.
Engine was running well, no issues.

I used the complete engine harness and ECU of the A4.

Note: The ECU has the Giac PC16 chip.

Note: A few weeks ago, I put another A4 ECU (an obscure T.A.P. +50hp chip) into another 1999 Passat (AEB, FWD) and it ran without any issues or adjustments.

The car is now running terrible (pretty much not driving at all), but only codes I get from VAGcom scans is

17604 - Oxygen (Lambda) Sensor Heater Circuit: B1 S1
P1196 - 35-00 - Electrical Malfunction

I was always under the impression that the O2 sensors have only little impact on the engine (downstream/post cat only monitoring the condition of the cat, pretty much only throwing CEL; upstream (before cat) adjusting air fuel; maybe a bit of rough running or poor gas mileage?).

Could the O2 sensor (electrical malfunction sounds like the heater is bad, or wires) cause the terrible running (idle is hunting, when attempting to drive large hick ups, stutter, even dying of the engine unless I keep the revs up really high).

Or am I dealing with more 'mondane' (intake leak, boost leak, vac leak, connectors/wires/cables/sensors) issues? But now codes....

Can you elaborate on the O2 sensor influence on ECU?
When (cold or warm engine, idle, partial load, WOT)?
How (change timing, injectors, boost)?

The code says Sensor Heater Circuit Electrical Malfunction. Bad heater (circuit) leads to bad O2 sensor signals which (can) lead to instable idle, extremely poor running partial load (no load revving is not so bad)?

Update: I unplugged both O2 (brown and black). No difference.

Went back to basics and checked hoses and connections. Before even running an intake leak test, I found the intake hose from throttle body to driver side FMIC connecting pipe not sitting properly. Reseated and properly tightened the hose: she ran like a sweetheart (still no O2 connected).

have you  ever seen a "malfunction in circuit" error on me7 narrowband.. which latches the lambda adjust +25% when it does it.
seen several seat ibiza cupra's show this.. wiring from lambda to ecu rewired 1:1 on one car but not change.

Wondering if the common (buy misguided) fitting resistors to replace N112,N249 etc solenoids would have in some way damaged an output stage or two on the ecu...

thoughts?