Yep it's a fault. I've had two MK2's and the first one had the same problem.

Try spraying some WD40 in and around it, might just be something clogging it up, worked for me at the time.
 
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More likely that the pin it moves on has rusted up. There is a guide on here that shows you how to get to the badge and take it off. Took me a 2 hrs to do and that does include freeing up the pin to move freely.

If no one has found the guide, i have it saved on another laptop that i can post the link to.
 
Hmm, I'll have to have a look at taking it apart then..

Would the rusty pin make it so that the handle doesn't work every time? Or is there a special way of opening the boot? As sometimes I turn the badge and nothing happens..
 
There is a small micro switch where the badge pushes against, this activates the boot release. When mine rusted up, it would stop the badge from returning to its normal position and i would have to push it back.

The guide i used shows how you get the door card off the boot. Its needs a hard pull to remove it.
 
If i had my laptop i would post the link, however thats not at work :cry:

When i get home i can post it, it was a guide to install a rear facing camera but it goes through how to get the badge off. And i cant remember what the thread is called either.
 
Mine did this but giving it a soak in wd40 seemed to work for me without taking it apart...

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