That option 2 wiring would be wrong for a dumb switch, so they’re relying on some sort of smartswitch behavior. I didn’t read too far into it but

• they specify only certain models for the virtual switch. Are you using one of those?
• those switches can pair directly with smart bulbs: was the old switch using those?
• the writing diagram assumes three colored wires on the traveler (black, white, red) however older wiring commonly used only two. Can you verify you have three?
• could you have lost some configuration on the switches when the power was disconnected?