1)I don't understand the the extreme range of prices for spiders that are very similar
You are expecting a degree of precision that simply doesn't exist in the used/classic car market. As others have written, any seller can ask whatever price they want. Sometimes an over-enthusiastic buyer will take the bait, sometimes they won't. Part of the country, season of the year, color of the car, dumb luck, ... all play a part in setting classic car prices.
2) Why does "everyone" say these cars need to be driven or else they're going to require a lot of maintenance? That sounds like I should be looking for a high mileage spider instead of low.
Good point. I think that idea applied when these cars were carburated and gaskets & seals were made of materials like leather. A S3 spider is a sufficiently modern car that the idea of an "Italian tune up" is less applicable. So yea, look for a low mileage car. But flush the fluids if it has been off the road a long time.
3) "S3's will never be collectible", why? If that's the case will they just keep depreciating?
Yup, they'll just keep depreciating relative to the overall classic car market
. No one can predict the future - if classic cars in general keep climbing, S3's will get pulled along. But their price appreciation won't match short wheel base 911's and Enzo-era Ferraris. Alternatively, if the classic car market crashes, S3's are going to tumble too.
I was hoping the Graduate that I'm looking at was a steal at around $7k .... If this is just fair market price I'll probably pass.
As RenaissanceMan writes, whether you pay $7K or $8.5K for your S3 spider, it's a heck of a deal relative to a new car. Also, that $7K "bargain" may need $2,000 worth of tires, batteries, radiators, ... in your first year of ownership, while the $8,500 car may be maintenance free. As I said at the outset, there is little precision in these things.