Same situation.
Type cover for Surface Pro 4 just stopped working. Not even a recent (within 3 days) update to point to, it just stopped working, as did screen auto-rotation.
It shows up in the device manager, and a Surface Pro 3 type cover works on this device, while the SP4 type cover works with my old Surface! The SP4 type cover's touchpd works in UEFI, but no keys.
Clearly there's some software disruption going on between the device and accessory, but no idea what. Given the auto-rotate isn't working, something to do with the sensors seems a reasonable guess. How tf has Microsoft not done something about this yet? Good lord, this is ridiculous.
Im wondering how many people had a Bluetooth device (mouse, etc) active, as I've had issues before with the type cover not working while a Bluetooth mouse was active.
Im also curious about how many people suffering this bug were also subject to the warranty return for the screen bug - a bit of planned obsolescence perhaps? Would explain why MS isn't doing a damn thing about it - "its not a bug, its a feature!".