Can a slide hammer be used to remove the ignition key lock cylinder or should I drill it out?

before you drill it tap the end of the lock cylinder where the key goes in with the handle end of a large screwdriver. try different levels of force and then insert the key and try to turn. 90% of the time you can get the lock cylinder to turn with this method. the key needs to be in the accessory position to release the lock mechanism that holds the lock cylinder in place.

You should be able to see the lock button on the underside of the column with the trim panels removed. This piece can be drilled out a lot easier than the lock cylinder. A good center punch and a small bit to start and then increase the bit size until most of it is removed. You can then use a pick to remove the rest of the button and the lock cylinder will slide out.

I’m happy to assist further over the phone at https://www.6ya.com/expert/jeremy_d728a59f986299fa

You must somehow get the ignition to the "on" position. Remove the cover around the steering column and there should be a hole below the ignition switch/key cylinder. Insert a drill bit (a size that can go into the hole), tap it with a hammer until the key cylinder can slide out. Remember in order to do this, the key must be set to "on". If you are unable to to get it to the "on" position. You must drill the lock pin inside that hole until the key cylinder can be removed.

You need to turn key to ON position and stick pin or paper clip in hole on side to release it so you can pull it out.

Section 11-04B: Steering Column, Ranger/Explorer 1994 Ranger and Explorer Vehicles Workshop Manual
REMOVAL AND INSTALLATION Ignition Switch Lock Cylinder (Without Key) NOTE: The following procedure applies to vehicles where the lock cylinder is inoperative and the lock cylinder cannot be rotated due to a lost or broken ignition key and the key number not known or the lock cylinder cap is damaged and/or broken to the extent that the lock cylinder cannot be rotated.
Removal

1. Disconnect the battery ground cable . For tilt columns, tilt to the full up position. Remove the steering wheel , steering column locking lever (3B661) , and steering column trim shrouds as described in this section. NOTE: When drilling out the retaining pin, take care not to damage the cast housing.
   

1. Punch the lock cylinder retaining pin with a ***** punch (1/8 inch maximum outside diameter). Using a 3.17mm (1/8-inch) diameter drill, drill out the retaining pin going no deeper than 12.7mm (1/2 inch).

1. Place a chisel at the base of the ignition lock cylinder cap. Using a hammer, strike the chisel with sharp blows to break the cap away from the lock cylinder.

1. Using a 9.8mm (3/8-inch) diameter drill, drill down the middle of the ignition lock key slot approximately 45mm (1-3/4 inch) until the ignition lock key slot breaks loose from the steering column cover casting. Remove the ignition lock key slot and the drill shavings from the base of the cover cast housing.

1. Remove the lock cylinder drive gear, bearing retainer and actuator from the casting as described in this section. Thoroughly clean the components in an acceptable cleaning solution. Carefully inspect all components for any damage resulting from the drill operation. If any of the components show signs of damage, they must be replaced. Clean the casting with compressed air to remove any drill shavings or foreign particles and carefully inspect it for damage. If the casting is damaged, replace it with a new one.

Installation

1. Lubricate the lock cylinder with grease.

1. Reinstall the lock cylinder drive gear, bearing retainer and actuator. Lubricate with grease before installing.

1. Turn the lock cylinder to the ON position and depress the lock cylinder housing retaining pin.

1. Insert the lock cylinder into the lock cylinder housing making sure that the tab at the end of the cylinder aligns with the slot in the steering gear (3504) .

1. Turn the key to the OFF position. This action will permit the retaining pin to extend into the lock cylinder housing hole.

1. Using the ignition key, rotate the ignition switch lock cylinder to make sure to correct mechanical operation in all positions.

1. Connect ignition key warning switch terminal and wire .

1. Install the upper and lower steering column shrouds as described in this section.

1. Install the steering wheel as described in this section. NOTE: When the battery is disconnected and reconnected, some abnormal drive symptoms may occur while the powertrain control module relearns its adaptive strategy. The vehicle may need to be driven 10 miles or more to relearn the strategy.
   

1. Connect the battery ground cable .

1. Check for proper start in PARK or NEUTRAL. Also check to make certain that the start circuit cannot be actuated in the DRIVE and REVERSE positions

This is a common problem on these cars. It needs an ignition cylinder. The new one is revised to prevent this from happening. You must either drill the old one out or use a slide hammer to remove it. Sometimes you can wiggle the key and tap it with a hammer to free it up,but it will still need to be replaced.

Ignition Lock Cylinder REMOVAL & INSTALLATION Functional Lock The following procedure applies to vehicles that have functional lock cylinders. Such cylinders either have a key available or known key numbers from which a key can be made.

1. Disconnect the negative battery cable.
2. Turn the lock cylinder key to the RUN position.
3. Using a 1?8 in. (3mm) diameter wire pin or a small drift, depress the lock cylinder retaining pin through the access hole in the upper steering column shroud (under the ignition lock cylinder) while pulling out on the lock cylinder. Remove the lock cylinder from the column. Fig. 1: Using the key, turn the ignition lock cylinder to the RUN position, then depress the retaining pin using a wire pin or small drift
   To install:
   
4. Install the lock cylinder by turning it to the RUN position and depressing the retaining pin. Insert the lock cylinder into its housing. Make sure the cylinder is fully seated and aligned in the interlocking washer before turning the key to the OFF position. This will permit the cylinder retaining pin to extend into the cylinder housing.
5. Rotate the lock cylinder using the lock cylinder key, to ensure correct mechanical operation in all positions.
6. Connect the negative battery cable.

Non-Functional Lock The following procedure applies to vehicles in which the ignition lock is inoperative and the lock cylinder cannot be rotated due to a lost or broken key, unknown key number or a lock cylinder cap that has been damaged and/or broken to the extent that the lock cylinder cannot be rotated. 1986-90 VEHICLES

1. Disconnect the negative battery cable.
2. Remove the steering wheel. For details, please refer to the procedure located earlier in this section.
3. Remove the two trim shroud halves after removing the three attaching screws.
4. Disengage the electrical connector from the key warning switch.
5. Using a 1?8 in. (3mm) diameter drill, carefully drill out the retaining pin, being careful not to drill deeper than 1?2 in. (13mm).
6. Place a suitable chisel at the base of the ignition lock cylinder cap, then, using a suitable hammer, strike the chisel with sharp blows to break the cap away from the lock cylinder.
7. Using a 3?8 in. (10mm) diameter drill, carefully drill down the middle of the ignition key slot approximately 1 3?4 in. (44mm) until the lock cylinder breaks loose from its breakaway base. Remove the lock cylinder and drill shavings from the lock cylinder housing.
8. Remove the retainer, washer, ignition switch and actuator. Thoroughly clean all the drill shavings from the casting.
9. Inspect the lock cylinder housing for damage from the removal operation. To install:
   
10. Replace the lock cylinder housing if it was damaged.
11. Install the actuator and ignition switch.
12. Install the trim and electrical parts.
13. Install a new ignition lock cylinder.
14. Install the steering wheel. For details, please refer to the procedure located earlier in this section.
15. Connect the negative battery cable.
16. Check the lock cylinder operation.

1991-95 VEHICLES

1. Disconnect the negative battery cable.
2. Remove the steering wheel.
3. Using locking pliers, twist the cylinder cap until it separates from the lock cylinder.
4. Using a 3?8 in. (10mm) diameter drill bit, drill down the middle of the ignition lock key slot approximately 1 3?4 in. (44mm) until the lock cylinder releases from its breakaway base. Remove the lock cylinder and drill shavings from the lock cylinder housing.
5. Remove the retainer, washer, ignition switch and actuator. Thoroughly clean all drill shavings and other foreign materials from the casting.
6. Inspect the lock cylinder housing for damage from the removal operation. If the housing is damaged, it must be replaced. To install:
   
7. Replace the lock cylinder housing, if damaged.
8. Install the actuator and ignition switch.
9. Install the trim and electrical parts.
10. Install the ignition lock cylinder.
11. Install the steering wheel.
12. Connect the negative battery cable, then check the lock cylinder operation.

Here's what you need:
1) Drill
2) 5/32′ cobalt drill bit (use cobalt, it's for drilling hard metals and is necessary)
3) 10mm socket wrench
Here's what you do:
1) Remove panel underneath steering column (4 X 10mm bolts)
2) Remove plastic shield covering ignition (should just snap out)
3) On the underside of the ignition assembly, you'll see a small hole (~1/4′) about 2 inches back from where the key goes. Using the 5/32′ drill bit, drill up into the hole, trying to center the drill bit on the pin which is inside the hole. You can normally push this retaining pin in if the ignition is turned to the first position and slide the cylinder out.
4) When the pin is drilled out completely, the lock cylinder should be easy to pop out with a small flat head screwdriver pried just underneath where the key goes on the front of the ignition.
5) The new cylinder should slide right in (with the key inserted and turned to the first position - ACC)
Heres what it cost:
1) Ignition lock cylinder assembly from Toyota dealer ~ $115
2) 5/32′ cobalt drill bit ~$4

autozone.com has a free repair guide, see below

REMOVAL & INSTALLATION

1990-94 Cabriolet,1990-93 Fox, 1990-92 Golf and Jetta

Fig. Lock cylinder drill point.

1. Disconnect the negative battery cable.
2. Remove the steering wheel, then remove the steering column covers.
3. Remove the turn signal and wiper switches.
4. Disconnect the ignition switch wiring.
5. On some models, the hole in the lock body for removing the ignition lock cylinder was not drilled by Volkswagen. To make the hole, use the following measurements in conjunction with the illustrations. Drill the hole where "a" and "b" intersect on the lock body. The hole should be drilled 0.19 inch (3mm) deep
6. Remove the lock cylinder by pushing a small drill bit or piece of wire into the hole and pulling the cylinder out. It might be easier to insert the ignition key, turn it to the right a little and pull on it.

To install:

1. Insert the lock cylinder into the housing with the key in the cylinder.
2. While gently turning the key side-to-side, press the cylinder in to the stop. It should click into place.
3. Temporarily fit the steering wheel onto the splines, then make sure the column locks and unlocks smoothly.
4. Install the switches, column covers, wiring and the steering wheel.
5. Connect the battery cable.

1995-99 Cabrio, 1993-99 Golf and Jetta

1. Disconnect the negative battery cable.
2. Center the steering wheel.
3. Remove the air bag.
4. Remove the steering column switches.
5. If the vehicle is equipped with an automatic transmission, detach the shift lock cable from the lock cylinder housing.
6. Remove the adapter sleeve from the steering column.
7. Remove the spring and horn contact ring from the steering column assembly.
8. Detach the sheer bolt.
9. Insert the ignition key and unlock the cylinder, then detach the wiring connectors.
10. Once all wiring has been detached, slide the housing off the steering column.
11. Mark and drill the lock cylinder as shown and described in the above procedure.
12. Compress the stop spring and pull the lock cylinder out of the steering column housing.
13. Put the new lock cylinder into the steering lock housing.
14. Insert the key into the lock cylinder.
15. While you gently turn the key, insert the lock cylinder fully into the housing.
16. The rest of the installation procedure is the reverse of removal.

NOTE Always use a new shear pin when installing the lock cylinder.

Ignition Switch REMOVAL & INSTALLATION The ignition switch is located at the bottom of the ignition key cylinder body. To remove the ignition switch, first remove the ignition lock cylinder.

1993–99 Golf and Jetta

1. Disconnect the negative battery cable.
2. Center the steering wheel.
3. Remove the air bag.
4. Remove the steering column switches.
5. If the vehicle is equipped with an automatic transmission, detach the shift lock cable from the lock cylinder housing.
6. Remove the adapter sleeve from the steering column.
7. Remove the spring and horn contact ring from the steering column assembly.
8. Detach the sheer bolt.
9. Insert the ignition key and unlock the cylinder, then detach the wiring connectors.
10. Once all wiring has been detached, slide the housing off the steering column.
11. Mark and drill the lock cylinder as shown and described in the above procedure.
12. Compress the stop spring and pull the lock cylinder out of the steering column housing.
13. Put the new lock cylinder into the steering lock housing.
14. Insert the key into the lock cylinder.
15. While you gently turn the key, insert the lock cylinder fully into the housing.
16. The rest of the installation procedure is the reverse of removal. NOTE: Always use a new shear pin when installing the lock cylinder.
    

It is not necessary to have the dealer do this, think of the cash! Though it does require patience and time. The pin you are supposed to push in goes into a slot when you have it in run position, since you cannot turn it to run you have to make a slot for the pin to go into, with a drill. Be very careful as you only have a 1/4" of play before you break a washer behind the cylinder. Once you have drilled out the key far enough to the pin hole you can take a nail set and tap the pin up, you can tell when the pin clears the housing, then it just takes wiggle, patience and tinkering to get the cylinder to slide out, keep the green washer and the metal slot washer. Metal slot washer goes in first with green plastic washer ontop of that with lock cylinder in last. You can play around with the new lock cylinder and washer before insertion to determin correct direction.

Here are official directions with inoperable lock cylinder. They say drill out retaining pin but it just spun in circles for me - I looked at new cylinder and saw how it worked. retaining pin needs a place to go.
Removal & Installation (Non-Functional)
NOTE:Use this procedure to remove ignition lock cylinder if key is missing or cylinder is frozen.

Disconnect negative battery cable. Disable air bag system. See appropriate AIR BAG RESTRAINT SYSTEMS article in RESTRAINTS. Wait at least one minute for air bag back-up power supply to deplete. Remove steering wheel. See STEERING WHEEL . Using a 1/8" bit, drill out retaining pin located below lock cylinder on housing. DO NOT drill deeper than 1/2".
Using channel lock pliers, twist lock cylinder cap until it separates from lock cylinder. Using a 3/8" drill bit, drill down center of ignition lock key slot about 1 3/4" until lock cylinder breaks loose from its base.
Remove retainer, washer, and lock cylinder gear from housing. Remove metal shavings from lock cylinder bore. Replace housing if damaged. To install, reverse removal procedure. Connect negative battery cable. Check air bag system for proper system operation. See appropriate AIR BAG RESTRAINT SYSTEMS article in RESTRAINTS.