Setup of unlocking macbook pro m1 with apple watch 8 fail

I have exactly the same issue with an older generation macbook air, I have been fighting with it for days, its like it just doesnt see the watch, the phone and the watch are fine and talk to each other.

I have tried purging the auto connect items from keychain, repairing the apple watch with the phone, resetting the watch entirely and starting from scratch, disabling and enabling the handoff functions and various combinations of airplane mode and bluetooth on and off and wireless on and off on the different devices.

I have signed out from my apple ID on all the devices and signed back in and it still just says it was unable to communicate with my apple watch, I am guessing something is broken in this functionality with the newest watches because it worked rock steady with my older series 5 watch.

Hi mate100,

Let's make sure both the Apple Watch and Mac meet the system requirements to use the feature, but viewing the information here: System requirements for Continuity on Mac, iPhone, iPad, iPod touch, and Apple Watch - Apple Support

If they both meet the requirements, then let's make sure it is setup properly by completing the steps below that are also listed here: Unlock your Mac with your Apple Watch - Apple Support

How to set up Auto Unlock

1. Make sure that your Mac and Apple Watch meet the system requirements for Auto Unlock.

2. Make sure that your devices are set up as follows:

• Your Mac has Wi-Fi and Bluetooth turned on.

• Your Mac and Apple Watch are signed in to iCloud with the same Apple ID, and your Apple ID is using two-factor authentication.

• Your Apple Watch is using a passcode.

3. Choose Apple menu  > System Preferences, then click Security & Privacy. Select ”Use your Apple Watch to unlock apps and your Mac” or ”Allow your Apple Watch to unlock your Mac.”

If you're not sure whether your Mac supports Auto Unlock, press and hold the Option key while choosing Apple menu > System Information. Select Wi-Fi in the sidebar, then look for ”Auto Unlock: Supported” on the right:

Best regards

Okay I just got mine working, if you restored from an old apple backup or your watch is the same "name" as your previous watches try changing the name to something new and different, as soon as I have done that it just worked.