Tried everything, still can't unlock Macbook Pro with Apple Watch

OMG!!!!!!! I have talked with several Apple Care and GeniusBar specialists and all they want to do is unpair the watch. I told them I have 2-step verification turned on, that I have done everything I'm supposed to do and I get the same exact error you get.... It used to work and now it doesn't. Maddening.

Do you have any Bluetooth devices connected to you Mac? I was having the same issues with the unlock feature, then I noticed the Bluetooth symbol in the menu bar was showing it was paired (three dots through the center of the symbol) even though I had nothing paired with my laptop. I opened Bluetooth preferences and deleted the two devices listed there that had been previously connected, but were not currently connected. After deleting these items, the Bluetooth symbol returned to its normal unpaired look, and the unlock feature started working 100%.

I then tried experimenting a little. First, I paired my Bose speaker. 100% failure, required my password every time. Next, I unpaired the speaker and paired an Apple Magic mouse. This resulted in about a 50% failure rate but always worked when I clicked cancel then tried logging back in. I have not tried any other devices or multiple like a mouse and keyboard.

Have you tried restarting signing in and out of iCloud on you iPhone? About a week ago my Mac stopped unlocking from my watch. After rebooting the watch and Mac and signing in and out of iCloud on both devices with no success, I tried restarting my phone and everything starting working again. Could of been an isolated incident though, where something was hung up on my phone which caused issues with the watch.

This seems like a very fragile feature, probably due to the need for high security and the difficulty of calculating time of flight at such a short distance. The fact that other bluetooth devices can cause problems with this is troubling considering how much Apple pushes BT hardware. I think this feature should of kept its Beta label like Siri did when introduced on the iPhone 4S.

Try also disabling 2FA - in Apple ID. Give it a few minutes. Then re-enable 2FA. It changed - I had early-adopted it and was used to the four-digit; the new one presents a dialog box with a map, and it's six digits. Once I had that set up, I enabled unlocking again, and now it works, more than 95% of the time. It is the one thing I was really waiting for as I was a perfectly satisfied watchOS 2 user, and it's great. I wish it worked on all my devices - and in generation 5 or whatever I presume it will.

This did have the effect of freaking out my iMac which can't run Sierra and which told me that iCloud login was no longer allowed. Apple giveth and Apple taketh away...