I play this game for 2 years now on 2 seperate controllers. Had no issues ever with split screen except that it is random what controller is "player 1" and who is "player 2"

yeah

Since the newest update I am also having issues being forced to use Keyboard for player 1.

I have that same issue from time to time, what fixes it for me is when that happens just back out to the main menu a single time and re-enter the world.

For some reason it happens on the first entering of the game...

After the update, our kb&m and Xbox controller syncs to the same character so we can no longer play co-op. Also, trying to add in a PS5 dual sense controller gives complete camera and jump control to the dual sense user for both players regardless if the dual sense is player 1 or 2.

This issue also occurs when using a Steam Deck, but it's specific to a particular profile. When using Profile A on the Steam Deck, Player 1 can use the built-in controller without any issues. However, when switching to Profile B (also Player 1), the controller doesn't respond, and the 'Press A to join' prompt appears on screen for a second player to join instead. Pressing A on the Steam Deck results in entering split-screen mode. I've been alternating between the two profiles to identify any differences, but nothing obvious stands out.

This is in addition to the previous issue I mentioned on Windows (unable to enable controller support for Player 1, even after selecting it in-game).

I should also mention that we had hundreds of in-game hours with two controllers (Player 1 and Player 2) on PC without any issues, prior to what I believe was a change introduced with an early December update.

UPDATE:
Resolved on Discord - Silly me forgot to look at the internal Wobbly settings and P1 controller was switched off on the steam deck profile in question.