Ok, so I found the answer to this question. I’m going to save you a LOT of time and hassle. I called Apple Technical Support and they had me literally signing out of all my devices and having my iPhone forget them, etc. That took me hours to get things connected back up with Bluetooth etc. and in the end, their fix did not work! First things first, I have an iPhone 13 Pro Max and I had 15 AirTags in my Apple Find My app. I had one more AirTag that I needed to get activated and I got the same error message as above. Before you wipe out your phone and start blanking devices - stop! Check your devices section of the Find My app. I have 3 different sets of AirPods. I have an original set, a set of AirPod Pros and a set of AirPod Pro Max headphones. I had gone to each pair of headphones and had them removed from the Find My app and, originally, that did not work. I think there are some factors at play in my situation that may be helpful. Since I’ve spent the past month and a half unsuccessfully trying to get this resolved, I hope to save some fellow Apple family the same frustration!
First, make sure your software is up to date on your iphone.
Second, take the AirTag you are having trouble getting to pair and remove the backing cover off of it and remove the battery. Place the battery back in the AirTag and press down on the battery until you hear a chirp. Do this 4 more times (a total of 5 times) and you will hear a different chirping sound than the other times. At that time, replace the backing cover and you have successfully restarted/reset your AirTag.
Go into your Bluetooth app on your iphone and select your AirPods info (the circle around the lower case i ) and select forget this device. Repeat this for each set of AirPods you have. You DO NOT need to do this for any other devices that connect via BlueTooth. You don’t need to do this for your Apple Watch or your iPad, etc. Don’t waste your time.
Once you have gone through Bluetooth on your phone and forgotten your AirPods, then open the Find My app and then select each AirPod and select Forget This Device from that location. Do this only for each AirPod on your Find My app. No need to forget any other device.
After you do that, turn off your phone.
Now here’s something that I did that was different that may actually make a difference for you! I took only my iphone and my 16th AirTag outside. I walked out into my driveway to get away from the myriad of other Apple devices in my house that could potentially interfere. I have 3 AirPods in the house, an iPad, a MBP and an iMac. I wanted no other interference. I did have on my Apple Watch and a Fitbit that connect via Bluetooth to my phone, but they didn’t interfere. Once I was a good 10 yards away from all other Apple devices, I powered my iPhone back on. I brought the AirTag out of my pocket and when the AirTag showed up in the lock screen of my iPhone, I tapped connect and it immediately began the set up process. I was stunned because I have been negatively conditioned to nothing working and getting that annoying error message. Anyhow I was able to set up the 16th AirTag and then add all my AirPods back to my Bluetooth and Find My accounts.
Whew!