2006 Prius Key FOB Only Works In Keyhole.

My wife lost her keys and while searching for them we found a second FOB we didn't know we had. It opens the car doors just fine wirelessly but when I try to start the car, two error lights come on. But when I insert the FOB into the Keyhole, it starts the car just fine.

A few minutes ago we found her keys. The FOB works just like it always has, including starting the car WITHOUT having to insert the FOB into the Keyhole.

Any ideas why one FOB starts the car without inserting it into the keyhole and the other does not?

Notes:
1. Changed the CR2032 battery.
2. The button on the left side under the dashboard is in the correct (Out) position.