Still getting this issue with Xcode 13.2.1. Please give me an option to just completely disable any form of connection with the Apple Watch from within Xcode, I don't want it to be used for development in any way. I'm sick of sitting down to do development work and having this pop up appear.
I don't know why this is still a problem after several months, it doesn't exactly paint a great light of Apple's internal QA processes.