Apple Watch does not ask for passcode
Brand new AW9 GPS 41mm. At initial setup I was asked for passcode and entered it. Used backup from previous watch and then upgraded to os10.6.1. Everything works fine, but the watch never asks for passcode after having taken it off the wrist or after restart. Everything in the Passcode section is grayed out and cannot be edited, except wrist detection which is on (see attached screenshot). No profiles have been set.
I have tried restarting (watch and iPhone), erasing all data and setting up again from another backup, and finally unpairing and setting up as a new watch, with no fix. Could it be a hardware issue? Note that all watch functions and measurements are OK. Thanks for any suggestions.
Apple Watch Series 9