Had an issue where the xbox wireless controller would connect and work through bluetooth but steam was not recognizing it. "No device detected" or something phrased like that. The device worked with xbox game pass games ran through the app so it was working but steam would not recognize it. Tried everything under the sun to get it to work using every method proposed by every website/youtube video.
The fix was to go into steam big picture mode > controllers settings > and at the bottom of the page a button called "unhide devices". You need to spam this button like it owes you money. Take all your frustration out on it that has built up over the hours you've spent on this issue. It will just "all of a sudden work". I don't know why but it does.