This is a good idea. The VW boss' presence at the Bahrain GP has sparked rumours that VW could enter F1. Me as a fan of German technologies,especially cars would love to see another German team enter the sport and try to beat Ferrari.
The engine's length is shorter than the Vs and is already on road use, Bugatti Veryon and VW Phaeton for instance. But there are many issues to be solve like exhaust,vibration,stiffness...
There are too problems with the idea of a W engine in F1 cars. The first is that a W engine has four banks of cylinders. 10 is not divisible by four (you cannot have half cylinders!) and so to make a W-10 engine you would need two banks of three cylinders and two banks of two. This would cause vibration problems (as VW found out with their V5 engines...however this was solved). It's simply not worth the effort.
The second problem is its width. A W configuration is shorter than a V-engine...but with four banks of cylinders it is inherantly wider. Renault got around the width problem with the R202, and R23 (both used V angles of around 111-120 degrees). But the bonus of a short engine is that you can have a larger fuel tank...which is now not needed. Solving the problem with width is not worth the effort. Besides with the new "one-engine-per-race weekend" rule no team is going to want to risk reliability on a W-engine when the tryed and tested V works just fine.
What would stop you form having each bank with staggered cylinders as in three cylinders (1,3,5 or 6,8,10 on the other bank) inline with the other two slightly further into the the center v? Exhaust routing could be interesting and it might be a vibration disaster, I don't know. It would certanly be shorter.
There have been already W-engines in F1 (Life) and made for F1 (MGN) in the early 90's.
Basically, the intake and exhaust layouts are a lot more complicated than in V-engines, not allowing, for instance, such elegant and efficient airboxes like in contemporary engines.
This last proposal is somewhat different and interesting, like narrow-VW-like engines assembled in the same block, with an angle between them. Vibration and exhaust would be issues, as well as crankshaft design.
