Apple watch reseted to factory defaults, unable to install update because it says it needs to be unpaired...this watch has only belong to me. Help

I reset my Iwatch series 3 to factory defaults. Now I'm trying to connect it again.

The app says that needs to do an update, but my watch needs to be unpaired...that doesn't make any sense. I have done the process multiple times with no success. This shouldn't be so difficult. I'm a computer engineer so...HELP