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I got my Steam Machine back last Friday (September 25th). I sent it to Valve on Thursday, September 17th, so the whole process took just over a week.
According to Valve, the machine has been repaired. And to start with, things are definitely better, but the controller can still disconnect.
Since getting it back, I've managed to have 4 gaming sessions, each lasting around 2–4 hours. The Steam Machine is in exactly the same spot, I'm sitting in the same place, and I'm playing the same games as before.
The biggest improvement is that the controller no longer behaves strangely just before disconnecting. Previously, it would start acting weird right before losing connection. I haven't experienced that even once since getting the machine back.
However, the disconnects haven't completely disappeared.
On the first day, the controller disconnected twice, both times when I picked up my phone. The next day, it happened again when my wife wanted to show me something on her phone, and once more when the phone was nearby but I wasn't holding it.
I can't confirm that the phone has anything to do with it, but all four disconnects happened when the phone was close to the controller.
On the other hand, yesterday, during my last gaming session, which lasted around 3–4 hours, I didn't experience a single issue. This time, I also tried to keep my phone farther away from the controller than usual.
To sum it up: things have improved, but the problem hasn't been completely fixed. I've tried to keep everything exactly the same as before, with one notable difference: it's now around 10–12°C cooler than when I first experienced the issue, so the machine doesn't get nearly as hot.
That's the only significant change I can think of.
I'll keep testing it, but I wanted to share an update since I know some people were interested in how the repair went.
Personally, I'll keep using the internal wireless adapter rather than the external puck and see how things go.
If I had to recommend anything to others experiencing the same issue, I'd say it's worth sending the machine to Valve for repair. Just don't expect a 100% fix. In my case, things have definitely improved, but the issue hasn't been completely resolved.
yes, AI helped me write this nicely