I tested the Allay Pickup using Gametext Framework, and it said the item was an unespected entity. It also happened while playing casually on my Switch. Im uploading the gametest report if that helps (It now works in 1.19.2 new worlds, it doesnt work in updated worlds)

Steps:

1. Enable GameTest Framework (optional)
2. Get/spawn/summon an allay
3. Give it an item.
4. Throw another similar item to the ground.

Observed Results:

Allay doesnt pickup, gametest says: "Did not expect Entity of type 'Minecraft:item<>'".

Expected Results:

Allay picks up the item and hands it back to a player or note block, test ends succesfully.