This is a great post, thanks for being so detailed.
I had the same problem after replacing the brake booster on my 99 c4. Before I ordered a replacement switch I took out the old switch per the instructions above and "reset" the ratcheting pin by pulling it out. Reinstalled the switch and voila - all is well again.
My problem was the switch pin was set to far in and the pedal wasnt hitting it when not applying the brakes, so the brake lights stayed on. This will set off the abs and psm lights after a few miles. Worth a try before ordering a new switch (however the switch is only around 20 bucks shipped).
Thanks again for the great photos.