Apple watch passcode greyed out

Recently purchased an Apple watch SE, have gone through the set up and remembered setting up a passcode when pairing the watch to my iPhone.

But when I try to download a new app on the watch it says something about a passcode and when I go to the passcode link it is all greyed out. The only thing that is available to toggle is the wrist detection.

I have done a number of steps from a google search on how to fix this but still no joy.

I have unpaired the device and re-paired it with the phone as a new watch but still doesnt work.

Tried turning wrist detection off, turning both the watch and the phone on and off.

help