How to reset administrator account on M1 MacBook Air

There were only 2 accounts set up on my wife's M1 MacBook Air: my wife's account (as a Standard user) and my account (as an administrator). My account is broken in that the machine does not accept my password. Strangely, I tried adding a user using my wife's account. Naturally, as she is a Standard user, I was asked to enter the name and password of an administrator. I entered the name of an account that was no longer listed on her machine (she migrated to this machine from an Intel MacBook Air) and its password and I was shown the following message in response: Authentication for "my user name" is disabled. I do not know how this came about, because I certainly did not choose to disable my account, but this would seem to explain why I cannot log in to that machine any more.

Thanks for your suggestions. I have contacted Apple support and, unfortunately, I am going to have to erase the disk and reinstall the OS. I don't know how it happened that I forgot the admin password but that will teach me to be more careful.

When I follow your instructions, step 4 is not presented to me straight away. Instead, after step 3, the menu bar is headed Recovery Assistant and I see a large box labelled macOS Recovery which asks me to "Select a user you know the password for". The screen contains my user name (I am the administrator on the machine) with the wording underneath in blue "Forgot all passwords?" If I click on that wording the next screen that comes up is the Activation Lock screen, which shows "This Mac is linked to an Apple ID. Enter the Apple ID and password that were previously used with this Mac: [my wife's Apple ID]." I entered her Apple ID and password and was told that Authentication Succeeded. Then I chose Utilities from the menu bar and chose Terminal. I typed 'resetpassword" and was then presented with the Reset Password screen. I then chose the option "I forgot my password" and was invited to sign in with my Apple ID. I entered my Apple ID and password and was sent a six digit code to my iPhone, which I entered into the window on the MacBook Air. I then observed the terminal processing the KeyRecoveryAssistant, but that did not work because I was then presented with a screen headed: "Reset Password Failed...The supplied iCloud account was unable to unlock this volume". I then clicked on a link on the bottom right of the screen labelled Exit to Recovery Utilities, but this merely exited the screen headed "Reset Password Failed" and left me on the screen with the menu bar containing Terminal, Shell, Edit, View, Window and Help.

So, in summary, I have now followed this procedure three times but I am not given the option to create a new password: each time I end up at the screen headed "Reset Password Failed".

Is there anything else I can try to reset the Administrator password?

I have a suspicion that the fact that my admin password does not work on my wife's MacBook Air may not have been an error on my part after all. Of course, I cannot prove this, but the same problem has occurred on my own M1 MacBook Air: i.e. I cannot log into an administrator account. The account is one that I have always been able to log into in the past and I have always used the same password for it. My suspicion, therefore (although I have no way of proving it) is that a software update has 'broken' the secondary administrator account. Luckily I run as administrator on my own M1 MacBook Air and I continue to be able to use that account, but the other account that I have always used for actually doing administration is now inaccessible, which seems very strange to me. Any way that does not help the fact that I will have to erase and reinstall my wife's MacBook Air but I thought I would just mention that it seems significant to me that an administrator's account on my own M1 MacBook Air is also broken.

The machine is an M1 MacBook Air, so it is not an Intel computer. I did Shutdown the machine rather than restart it.