Seems that wake-on-bluetooth for the Steam Deck LCD model is quite problematic, as Valve have again disabled it in the latest SteamOS update. This is in the Beta channel so you need to be in the Preview / Beta via Settings > System > System Update Channel.
SteamOS 3.7.17 Beta: The Blues changes are:
- Temporarily re-disabled experimental wake-on-bluetooth support for Steam Deck LCD while issues with spurious wake-ups are investigated.
- Fixed an issue that could prevent updating from specific older builds of SteamOS.
- Fixed a bug with the Discover app in desktop mode that could cause update failures in some scenarios.
Source: Valve
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