Unable to turn on two-factor authentication for Auto Unlock

I have exactly the same problem. Any updates on this issue?

I also have a problem setting up 2 factor verification ti use my iwatch for unlocking-

When I go to system preferences, icloud settings, account details, security and pick the option to set up 2 factor authentication. I fill in all the prompts correctly for the security questions and credit card details to verify the account andthen I get a message saying that the card security code is not correct, even though it is as I have logged onto my AppleID account and checked that the card security code on there is the one I am using.

I finally solved this. I turned off icloud on all my devices and then logged on to AppleID on the web and updated all the card details again. Then I logged back into icloud on my macbook using icloud settings and I was then able to setup two factor verification there without getting the card validation error.

I subsequemtly had a lot of problems getting my macbook to unlock with iwatch though as I couldn't see the option in the security & privacy settings on my macbook.Eventually after several iterations of disabling and enabling icloud on all my devices and rebooting all of them the unlock with icloud option finally appeared on my macbook.

Enabling unlocking with iWatch certainly doesn't seem to be a very robust or user friendly process!

I had exactly the same problem, but have just fixed it. After I couldn't enable two-factor authentication, I went to my Apple ID and enabled two-step authentication. This told me that I had to wait three days to turn the setting on, and told me to wait for an email. As soon as the email arrived, I enabled two-step and then immediately disabled it again. As soon as it was done, I got the option to turn on two-factor authentication on my iPhone (Settings->iCloud->my Apple ID->Security&Passwords). I could then enable two-factor on my Mac.

I have a feeling that I had requested two-step authentication a while back, so I'm wondering if there was something logged in the system that prevented two-factor from working, until I enabled and disabled it.