Auto unlock with Sierra doesnt work

Ive got everything turning on; two factor security, have my bluetooth turned on, have a passcode on my watch, ect. When i turn on my laptop it says 'unlocking with apple watch', but then prompts me to use passcode. ive tried everything, restarting computer, restarting watch, ect.

its on, cause if it wasnt, it wouldnt show me 'unlocking with apple watch', so i know its turned on, but for some reason, its not working. maybe a glitch?