Another FB report, in case it helps: FB16680096 (public mirror)

This was an intentional change in macOS Sequoia to limit the ability of key-logging malware to observe keys in other applications. The issue of concern was that shift+option can be used to generate alternate characters in passwords, such as Ø (shift-option-O). Thanks for letting us know. However, this should have been clearly documented in the release notes during the beta period so developers could have prepared for it. I also don't get the logic. The change only impacts sandboxed apps, but malware wouldn’t use sandboxing. Plus, any app can request input monitoring and misuse it, so this mostly hurts legitimate apps and their users, and does very little to stop actual malware.

I recommend submitting a Feedback Assistant report about this. The more reports, the more likely it will happen. Mine: FB13545880 - https://github.com/feedback-assistant/reports/issues/459

Another FB for this: FB11522170

I reported this to Apple a while ago, but no response yet: FB8530353 https://github.com/feedback-assistant/reports/issues/144