My watch stopped unlocking my MacBook Air after I installed the Monterey update (approx mid-Jan 2022). Nothing else changed with my iPhone or Watch, both are new as of mid-summer 2021 and up to date. I tried multiple varied suggestions and restarting everything, but nothing worked until I found the above instructions today. I went through step 4 to identify the "Auto Unlock: XXXX" listing, but was hesitant to delete everything, so I only deleted the two listed for the MacBook, then I went to Preferences to enable auto-unlock, checked the box, then clicked the lock to open and save the change and my watch prompted me to double-click to accept it. I then locked the Mac and closed it a minute. When I reopened the Mac, it unlocked with my Watch, and I can see the Keychain Access added two new MacBook items. So, you may not need to delete everything listed above to still have success in clearing out whatever caused confusion in the system. Thank you to stoska992 for the assistance!