Apple watch stopped unlocking due to Chrome Remote Desktop's screen sharing
Sorry for posting a comment as an answer to the main question, but unfortunately it appears I do not have enough reputation to leave a comment.

Anyway, I just wanted to point out that there was indeed an update on Chrome RD side: to be sure, I checked current version (80.0.3987) of /Library/PrivilegedHelperTools/ChromeRemoteDesktopHost.app and went into Time Machine to compare with the version I had before a couple of days ago (78.0.3904).

Also, I remember that a few days ago that I was asked to enable some Privacy settings in the Preference Pane when the update passed -- and I did so as instructed by some Google-looking GUI that appeared at start-up. I think they were 'Accessibility' and 'Screen recording'.

Since the update, I too have been experiencing the very same symptoms: that is, unlocking with Apple Watch stopped working.

HTH

Sergio