I am in the same situation with my MacBook Pro with M1Pro2021. After Sonoma update, or after installing VPN, the touch id stopped working. It's not registering any fingerprints. The button itself is working, meaning I can shutdown the laptop by pressing it. Touch ID wise, it's dead.
I tried reinstalling the system, I tried changing the touch ID button, nothing worked. I did hardware check and I got no errors. I think there is some sort of core software problem, but I am not willing to put any more time and effort into solving this problem.
The computer broke after 1 year and 3 months of utilization. This is 3 months after warranty expired. The computer costs about 2300 euros. Until now I paid an extra 200 euros for fixing it, with no results. How can someone call this quality? I have products from unknown brands that are more trustworthy than apple. Actually, I do not remember to own a product that broke down after 1 year :))
In conclusion, AWFUL experience with my own worked money. This is my first and 100% my LAST product I will buy from APPLE.
Ah, and one more thing. In my country, all the authorized Apple services have awful reviews. A lot of customers are paying big amounts of money and are waiting weeks for their devices to get fixed, and sometimes, they receive the products worse then they were sent to the service.