In the video, the stopped car is directly ahead of you, but the display shows an obstacle to the offside. Also there's a minimum distance of operation (for the Mk3 it's around 1m, probably similar for the Mk4) and the car ahead of you is outside that range. So there's clearly a fault, my guess would be a duff front offside sensor. Also note that the reason the warning ceases is not because the car ahead has moved out of range, but because you've exceeded the 5mph maximum speed for the PDC system.