I am really enjoying my experience with MacBook given that I converted from a Windows user from the past 15 years. This issue is the only. one that is very frustrating.
I wish that Apple Care and Customer support could have handled this issue graciously. I am done struggling with customer support. They are in denial mode. The case was escalated to someone who called himself a 'Senior Advisor' and that he is at the top of the chain. He was very arrogant and said that this cannot be escalated more than this.
He tried to mislead me that the M1 chips were never configured to support two displays. He had the audacity to say that because he had not taken the time to go through the case history and 30 minutes of chat with the representative where I had also provided the link to this thread. I had to tell him that all this worked well before November 2021 and that both displays were detecting.
He said he has to go through some steps involving data backup and OS reinstall before he can talk to his engineers and add a ticket.
So, everyone out there waiting for a solution, Apple has not yet decided to create a TICKET for the issue that has been known from November 2021. So, please adjust your expectations accordingly.
I request Apple to hire 'Senior Advisors' in Apple Care who do justice to the brand!