Client brought me a car after dealer could not fix problem.... 2006 Prius with Smart system.. Smart key button was in the out position. Car doors would lock and unlock fine when pressing the buttons on the FOB. When approaching the car, the doors would not open. Pressing the black button on the door handle would give a loud long beep. I ask the client how many keys she had and she said she bought the car used with one key. I noticed an aftermarket alarm(fleet car) and I pulled it out as she didn't need it. The car's smart system still will not work. I knew the beep was the same as when someone leaves a key in the car. I told her to look carefully around the car. She found a smart key hidden in the glove box!!!! Point of the story..The car will lock the doors IF you use the buttons on your second FOB.
Sorry to necro an old thread, but I just bought a 2007 Prius with this _exact same issue_. Pressing the black button = long beep, proximity would unlock from the trunk but not from either front door. Lo and behold, the car would start even without my FOB in it! Digging around, I found a second FOB under the passenger front seat. Removing this FOB solved the issue. _THANK YOU_ for saving me a trip to the dealer.