2009 s80 Ignition Replacement

[stanko3]

The ignition in my S80 had started grinding the gears and not wanting to release the fob so I purchased a used ignition to replace it with but now it spits the fob out and gives the "Key error please reinsert" message it does this with my fob which still functions for everything besides starting the car and also for the fob that came with the ignition I was under the impression the ignition itself would not need programmed as the transponder communicates with the module on the steering wheel not the ignition, if I'm off base on that assumption then I'm trying to see what my next step should be or if that is correct then its possible i received a faulty ignition? Any incite will be greatly appreciated