Just wanted to add this for anyone that it might help: My friend and I worked on this literally all day. We tried everything mentioned in all forms (clearing message history on phones and watches, turning iMessage off and on for both phones, changing emails and numbers, etc). Nothing worked.
Finally, in desperation, I went into my watch (the watch that couldn't initiate messages to the other one, because it didn't appear that they had an apple watch) and I removed that contact from favorites on the apple watch app on my iPhone, then re-added them to favorites. Not only did it sync their picture this time (no friends have pictures on my watch from initial sync... Hmm...), but now digital touch works!