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Same issue here after updating my controller yesterday... It was working with the Steam Link before that without any issues.
I think we are in the same boat, as I also just bought a brand new Xbox One S controller and am having the same issue. After spending some time looking into it, here is my understanding of the problem (others will doubtless correct me if I am mistaken).
1. Steam Link supports Bluetooth pairing with this controller as of build 530.
2. In order for it to work, the controller's firmware has to be updated. At the time build 530 was released, the latest firmware update was to version 3.1.1215.0. Those who have this firmware version have reported the controller works perfectly via Bluetooth.
3. There is a new firmware version out, version 3.1.1221.0. This is the version the Xbox Accessories app automatically updated my new controller to. There is no option to go from the version that came pre-installed on the controller to 3.1.1215.0 and stop there. The app forces you to go from whatever version was pre-installed straight to the newest version.
4. Steam Link will not currently pair with an Xbox One S controller that has firmware version 3.1.1221.0. This is true both for the current public and beta builds of Steam Link. Factory reset will not help, either.
As far as I can tell, unless there is a way to force firmware version 3.1.1215.0 onto a controller, the only thing to do is wait for Steam Link to get Bluetooth working with it. There are several links I found referencing this version as being released through some sort of preview program, but I am not a member of any such program, and that is definitely what Windows 10 with anniversary update installed on my controller, which was just purchased two days ago. Like you said, it works via USB cable, but not via Bluetooth. Very disappointed.
Valve appears to be aware of the issue, but I do not know if they know this firmware update is no longer limited to the preview program.
https://steamcommunity.com/app/353380/discussions/0/341537388325662999/
Really annoyed about this whole thing!
It HAS bluetooth! Why wouldn't this work???
Steamlink is updated, controller has been updated via xbox accessories app.
Even if I bought a wireless dongle for it, it wouldn't just work, I'd have to pay for virtualhere on top of that, so £20-40 extra and who knows if that will actually work.
It will pair with my laptop that has bluetooth....
Steam link picks up the controller, but comes up with a pairing fail after a minute of trying to connect.
Both products have been out for a long time, this isn't good enough. We're not talking about some obscure 3rd party hardware, or some complicated setup.
It's a ♥♥♥♥♥♥♥ xbox one controller and it just uses bluetooth.
Valve needs to get their ♥♥♥♥ together.
(On a lighter note, I got a steam controller at the same time and it's pretty awesome, unique and innovative. It's weird that the steamlink is so poorly cobbled together in comparison)
Any help is appreciated