Apple - macOS Sierra Apple Watch Unlock - persistant iCloud Sign in required dialog

I had the same problem: In settings I was definitely logged into iCloud, but the Apple Watch unlock setting still claimed I wasn't.

I stumbled on the following weird solution:

I happened to start FaceTime on Mac, and noticed that I wasn't logged into it. I logged in.

When I then opened the Security settings again, the Allow your Apple Watch to unlock your Mac was checked!

It appears that macOS needed to be rebooted.

To solve the problem:

• Be sure all of the above steps in question have been done
• Reboot MacBook
• Verify the settings in System Preferences > Security and Privacy

Now the unlock with Watch is working.

I had the same problem and I tried EVERYTHING to fix it. Saw your note about not being signing into Facetime. Well, I was signed into both Facetime and Messages, but I thought, what the heck. Unchecked Enable this Account in Messages setting, then re-enabled it and voila, my Apple Watchs showed back up as options to check to unlock my Mac again.