Apple Watch doesn't unlock Mac mini M1

I have the following and this is what worked for me:

M1 MBP Base Model

iPad Pro 12.9 latest model

iPhone 11 max pro

Apple Watch series 6

1. Make sure all are on the same WiFi network and Bluetooth enabled.
2. iCloud On on all devices
3. Signed In in all devices with same Apple ID
4. On the MBP, make sure to UNcheck the box “Use your Apple Watch to unlock...” in System Preferences > Security & Privacy
5. Sign Out of Apple ID ONLY on iPhone.
6. Restart MBP
7. Sign In with same Apple ID ONLY on iPhone
8. After signing in is completed on iPhone, go to System Preferences on iPad Pro and MacBook Pro and click Update Settings.
9. After all are updated, make sure your iPhone and Apple Watch are BOTH unlocked, then on MBP check the box “Use your Apple Watch to unlock...” in System Preferences > Security & Privacy
10. Now test it out; it should work. But you will have to re-add cards in your Wallet and Apple Pay for your iPhone and Apple Watch.