Thanks to google I was sent here searching for a solution. I actually found a fix (worked for me at least):
I had an issue today. Using Ally on iOS just fine for a couple of weeks. Today I was marking a bank as active and then ny N2Elite seemed to simply die (could not communicate with ally on iphone, and neither with my switch)
I fixed it by using the official n2elite read/writer that you connect to a pc over usb, using their official app aswel (N2EliteManager.exe)
It managed to connect and identify my n2elite
I simply marked a bank as active, and it started working again. Later it locked another time, then I decided to repeat using the n2elite pc read/writer, unlocked again...
Then I used ally to clean all banks, and reloaded only the nfcs i was going to use on Tears of the Kingdom
I dont know what caused this lock, maybe it is a bug in ally locking it, because it was still working fine with the pc read/writer.
So if your n2elite looks dead, try reading/writing with the official n2elite pc read/writer, hope it helps