I solved the issue on a Macbook Air mid 2013. TL;DR at the bottom.
The Air had I started off by verifying that a USB keyboard and mouse would function. Then I did a Time Machine (System Preferences/TimeMachine) backup because that’s the first thing I do on all customers macs that involve potential changes. Then I turned off FileVault (System Preferences/Security & Privacy/FileVault). That took many hours. Reason I turned of FV is because when I would reboot the system I could use the keyboard and touchpad on the Air. After logging in they would stop functioning. Hence I thought it was a software problem.
Then I updated from Yosemite to High Sierra to Catalina (cause it should be updated anyway). After that didn’t solve the issue I checked the Accessibility (System Preferences/Accessibility/Keyboard|Pointer Control) options for both mouse and keyboard. Mouse Keys and Sticky Keys were not turned on.
Then I moved, not deleted, the Users Preferences folder. Upon rebooting MacOS rebuilt the users preferences as if it was a new user signing in. Still not working I copied the old preferences back to the original location and skipped the existing files.
Next I tried booting to Catalina Recovery Mode via Catalina USB installer (make a Catalina USB installer, plug it in and hold the ALT key prior to boot chime of macbook). Had I done this in the first place I would have realized that the keyboard and trackpad also weren’t working in recovery from a different device, which is a big clue. Upon realizing this I decided to check the hardware more closely.
TL;DR: Initially I opened up the Air to verify that cables were ok and plugged in. Should have checked closer because upon removing the IPD Trackpad Flex Cable (under the battery) I noticed a small amount of corrosion on the trackpad side of the cable. I cleaned it with isopropyl alcohol and a toothbrush and let it dry. I also gently scrubbed the connecting ports. I didn’t find any other corrosion to lead me to other future problems (whew). Putting it back together the keyboard and trackpad started working 100%. Because I don’t trust corrosion I convinced the customer to get a replacement cable anyway.
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