I bought a 05 prius that doesn't have the keyless entry/start option so it is just the base model to where you must insert the key. The key fob is worn out and water and debris has caused some possible issues. It would start up fine but now does not recognize it when in the slot, and even with the door ajar that there is no beeping noise recognizing that the drivers door is open with the key in the slot. Only the door ajar indicator light on the dash is illuminated. It locks and unlocks but it does not turn on when it's in the slot. Another thing i noticed is that there is no beaping with the driver's door open and the key in the slot. 12v is good. I checked all fuses in cabin and in engine bay. The lock button would stick and kept draining the fob battery. I popped the lock button back out and now the fob unlock button works. Could I have done something with the lock button being stuck for a long period of time that it blew the transponder or something?
I could be all wrong, as I am gleaning info from a smart key remote, and not your key. I believe there is an RFID chip inside the FOB. That chip is sensed when it is inside the slot. Open up the case, clean it out, and look for the RFID chip. It think it is mounted in the case itself, and not on the circuit board. Clean it up and the rest of the insides. While you are at it, replace the battery. If that doesn't work, then it could be the slot. Do you have another key that works? Unfortunately, without another key that works, it is hard to test the slot. Make sure that you always have 2 working keys. Without a known working key, you are stuck with the Dealership or Locksmith to program a new key. Or, you can try to buy the techstream software and see if you can make it work.