Has this happened to anyone else? Suddenly I can no longer unlock my Mac with my watch. The only thing changed recently was installing latest updates. I noticed that on my Mac it says iCloud is not setup. Every time I try to complete the setup (not sure what caused it to be not set up as its been on Catalina since day 1), it never says its set up.
Edit: I did get a new iPad, does getting a new Apple device affect your account status on existing products?
Try this, worked for many that had this problem.
Open "Keychain Access"
2. In "View", enable "Show Invisible Items"
3. Search for "Auto Unlock"
4. You should see a whole bunch of application passwords for "Auto Unlock: XXXX's ..."
5. Select all records and delete (this will reset/disable auto unlock on other Macs if you use multiple Macs)
6. Whilst still in "Keychain Access", search for "AutoUnlock" (no space)
7. There should be 4 entries for "tlk" "tlk-nonsync" "classA" "classC"
8. Select 4 records and delete (don't worry if they re-appear, the system repairs this automatically)
9. Open "Finder" and navigate to "~/Library/Sharing/AutoUnlock"
10. There should be two files "ltk.plist" and "pairing-records.plist"
11. Delete both files
12. Open "System Preferences" and try enabling auto unlock. You may need to enable it twice, the first attempt will fail.