Sequoia 15.1.1 not working with wired Apple keyboard

I use mini Mac with apple keyboard for over a year. After the upgrade from 15.1 to 15.1.1, the wired keyboard stopped working. The USB B port works fine with std PC keyboard and other USB devices. The apple keyboard has a USB hub and that is detected on the system. I tried plugging the keyboard to USB C port and it still does no work. Lastly, I brought a similar keyboard that is tested and works on a Mac at home and that one does not work with the mini Mac.

I read somewhere that the keyboard driver can be erased during the upgrade. Is that true, how can I make it work?

Thanks