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They ran mag cases on the aircooled VWs for quite a long while. I don't remember when they started or stopped, but they reverted to aluminum because magnesium isn't as strong. Porsche had problems with their engines as well; they changed from sand-cast Al to die-cast Mg in the mid-60s, and by the time they were making 2.7 liter engines in the mid-70s the cases were failing at a (relatively) alarming rate. So in 78 they went back to Al.
Lots of non-structural parts for many cars are made of Mg as well; I am most familiar with the aircooled VW and Porsche stuff. For a long time the transmission cases were made of Mg, but again the strength did become an issue after a certain power level. On the Type IV VWs, the fan shroud was Mg while the crankcase and heads were Al.
The strength has been a problem with structural mag parts for a long time. With the current "need" for power and reliability, there will be some work needed to make Mg parts pracitcal.
-soD
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