I don't have an Apple Watch, but I think if we think about it, the issues aren't with the dongle. The process is half bluetooth, and then half WiFi (the other half of the process) takes over for the transfer. There is a LOT of interference with Bluetooth and 2.4 GHz WiFi. Even just searching for information, we can see even "a mess of wires" causes interference. I think its important to separate out the USB dongle far from the WiFi antenna via a USB extension cable (I'm using a UGREEN brand USB extender which works well I got off Amazon) if you are on a desktop system, like I am.
So here we can see wires/mess interfering:
"I tried to change AirPort Extreme to present 5GHz SID separately and connect only to 2.4GHz. Not much luck here. However what really made difference is cleanup of cables and wires (HDMI, USB, Network, Power etc) which I had between me and MacPro (it sits very close on the little table behind my desk). After all of cables were moved aside communication works pretty stable. So, in case you have MacPRO and got issue authenticating with iWatch, you might need to make sure there are not many active cables between you and your machine."
"Holy crap - that worked for me too! I had three WD hard drives all plugged into a hub velcroed to my laptop mount, along with three other active USB3 cables (
which are known to cause interference on 2.4GHz), and once I moved them all away from the 2014 rMBP and behind my stereo, unlock with the watch works every time!"
this is taken from "Apple watch unlock not reliable if Mac on 5ghz wifi"
https://discussions.apple.com/thread/7839099
So in my case I'm on ethernet, and I don't connect to any WiFi so my WiFi is 100% unused and ready to only be used for Handoff and Airdrop. If your desktop is on WiFi probably connect via 5GHz on your desktop so it doesn't interfere with the 2.4 GHz band that bluetooth uses. And then try 2.4 or 5.0 on the watch or take note of what you are using on the watch vs Desktop or Mac, etc. These are just ideas/theories of mine.
So we have:
[1] Dongle placement: where is the bluetooth dongle placed? is it in the back of a tower next to your WiFi antennas, is it plugged into the front of a metal case where the signal won't travel? can you use an extender to put it under your desk where you put your phone down?
[2] Dongle interference with 2.4 GHz WiFi - "this can be an issue "Bluetooth uses
frequency hopping, it changes channel (frequency) 1600 times per second. That way if one channel is disturbed only part of the data is lost. Also a re-transmit of data is possible."
[3] Is your desktop WiFi on 5.0 GHz where it won't interfere with Bluetooth and won't interfere with your home router's 2.4 GHz system?
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this was interesting, I found this:
"The 802.11v timestamp has been proposed to be used as a
“time of flight”calculation all the back since 2008. Apple has decided to use Time of Flight as a security mechanism for the Watch Unlock feature. Rather than just assume that the Watch is in range because it’s communicating over Bluetooth, Apple wanted to increase the security of the Watch/Mac connection. When the Mac detects that the Watch is within 3 meters of the Mac it is connected to via Handoff it is in the right range to trigger an unlock. This is where the 11ac card works magic.
When the Watch sends a Bluetooth signal to trigger the unlock, the Mac sends an additional 802.11v request to the watch via wireless. This request is then timed for arrival. Since the Mac knows the watch has to be within 3 meters, the timestamp on the packet has a very tight tolerance for delay. If the delay is within the acceptable parameters, the Watch unlock request is approved and your Mac is unlocked. If there is more than the acceptable deviation, such as when used via a Bluetooth repeater or some other kind of nefarious mechanism, the unlock request will fail because the system realizes the Watch is outside the “safe” zone for unlocking the Mac.
Why does the Mac require an 802.11ac card for 802.11v support? The simple answer is because
the Broadcom BCM43xx card in the early 2013 MacBooks and before doesn’t support the 802.11v time stamp field (page 5). Without support for the timestamp field, the 802.11v Time of Flight packet won’t work. The newer Broadcom 802.11ac compliant BCM43xx card in the mid-2013 MacBooks does support the time stamp field, thus allowing the security measure to work." SOURCE:
https://networkingnerd.net/2016/09/21/apple-watch-unlock-802-11ac-and-time/