Wireless keyboard and mouse not working properly after Sonoma 14.8.1 update

I am using a MacBook Pro Apple M2 Max, with a Magic Keyboard with Touch ID and numeric pad, and a Magic Mouse. After upgrading to Sonoma 14.8.1, I run into the following issues:

- Magic Keyboard:

• • TouchID key is not working
  • Volume keys do not work anymore (lower volume now controls "show desktop" feature)
  • Spotlight Search key no longer functional
  • etc

- Magic Mouse: scrolling does not work anymore (everything else works).

Note: when I turn off and on again the Magic Keyboard and Magic Mouse, the images that pop up on my screen are that of the original Magic Keyboard (not the current model) and of the Mighty Mouse (not of the current Magic Mouse model).

I tried the following fixes:

• Unpair/re-pair
• Forget devices/re-pair
• Terminal> sudo pkill bluetoothd command > restart
• Connecting devices with USB-C for >1 min
• Deleting all Bluetooth preference files from the Library and ByHost folders > Restart

None of these worked, it is getting pretty frustrating :/ Any help appreciated!