I checked the source code of SDK MANAGER 3.32
The problem seems to be in the screen.DDName that is created by the AVD MANAGER.
AVD MANAGER still create wear devices naming them
Android Wear Round
Android Wear Square
but with latest SDK they seems should be
Wear OS Round
Wear OS Square
If Erel can confirm this, and eventualy modify the next SDK MANAGER version, would be great.