Hi everyone! I experienced the same problem after updating to macOS Tahoe 26.3 on my MacBook Air M2 (2022). My Touch ID worked for everything except unlocking my Mac after the screen was locked. I finally resolved the issue and wanted to share my experience in case it helps someone else.
First, I should mention that my Mac has two user accounts: a standard user and an admin user. I always use the standard account and only use the administrator account for safety reasons.
To fix the problem, I started my Mac in Safe Mode as the standard user. I attempted to disable and re-enable Touch ID for unlocking my Mac, but this didn’t work. Then, I switched to the admin user and logged back in. Interestingly, macOS displayed an installation completion screen with pending steps, including reconnecting to my Apple ID. I tested unlocking with Touch ID and it still didn't work. I then disabled and enabled Touch ID again as an admin, without changing my registered fingerprints. When I tested unlocking the screen, it finally displayed the message indicating Touch ID was available for unlocking.
Next, I logged out of the admin account and returned to the standard user. Testing again as a standard user, I found that Touch ID unlock was working once more. Finally, I restarted in Normal Mode, and Touch ID was available to unlock the device again.
I haven't seen this solution posted before, so I hope it proves helpful to others who have tried everything else without success and are willing to try this alternative fix.
Good luck!
Oliver