On one Mac (MacBook Pro, 12.6.5) I have Quicken installed (7.0.1) and everything works as expected, I'm prompted on my watch to unlock the Quicken data file.
On my primary Mac (Mac Mini, 13.3.1) also running Quicken Mac 7.0.1 the password dialog box pops up immediately even though 'Allow Apple Watch to unlock this file' is selected. The Apple Watch unlock used to work, but hasn't for a few weeks. I've uninstalled and reinstalled, deselected and reselected the "allow Apple Watch…' option. No change in the application behavior.
Am I missing something?