I had the same problem. I had a Series 8 that unlocked my MBP M2 and upgraded it to a Series 10. It continued to unlock with no issues. After installing Sequoia and watchOS 11 it worked for a few hours then quit unlocking. Under Touch ID & Passwords in settings on my Mac, it had the name of my Series 8 listed and unlocking with it was turned on. The Series 10 was not there. I tried turning off the Series 8 then back on. It timed out with the “unable to communicate” message. I tried several suggestions from this and other forums with no luck. I figured out that my new watch was using the same name as my old one. So I gave my watch a new name. In the Watch app on iPhone, General > About > Name. Waited a few minutes for iCloud to sync, then opened up Touch ID & Password in settings on my Mac. The Series 8 name had been replaced with the new name. Turned on unlocking and it synced right away. No issues since. Hope this helps.