external display doesn't wake up when I wake up my Mac in clamshell mode.

been using previous versions of MacBook (intel 2019, 2017, etc) in clamshell mode for years now. I have an external display (Dell 3007WFP) connected and when I tap my Magic Keyboard, the external display wakes up and I'm at the login screen.

Since upgrading to an M1 MacBook Air and putting it in clamshell mode. this no longer works. I'll tap my keyboard endlessly and the display connected via Thunderbolt Hub will stay black. I'll have to open up my clamshell Mac and then the login screen will be present. Then after logging in I'll have to unplug my external display (which means disconnecting my Thunderbolt hub and all external USB drives first) and plug it back in. Super annoying.
Is there a remedy??

I'm going to guess it's the hub that is doing all the gatekeeping. Peripherals directly plugged in would likely not have this problem. The unfortunately issue is you only have 2 ports to play with making not using a hub inconvenient.
I would try using bluetooth and see if that works or helps. Or combinations of directly plugging in the display and keyboard into the MBA and see if that fixes the issue. That way you can directly determine whether or not it is the hub.

I tried plugging in an adapter a lot like this one: https://www.amazon.com/DisplayPort-JSAUX-Thunderbolt-Compatible-Plus-Grey/dp/B0836HGBD7/ref=sr_1_3?crid=3K601WRGCEUWZ&keywords=usb+c+to+mini+displayport&qid=1667760275&s=electronics&sprefix=usb+c+to+mini+displaypor,electronics,138&sr=1-3

This time I plug it directly into the thunderbolt port on my Mac.

When I do so, same issue. It won't wake up when tapping the keyboard. If I unplug and replug and tap then it works.

Sounds like some kind of wake issue related to key inputs.

Basically no one can help you here unless they've done this exact same thing, and I think those people will be limited. Basically if you want to solve this, you're going to have to spend a dumb amount of time testing every configuration to find the weak link and see if you can solve it. And then at the end of the day it still may not be solvable. Sorry to be the bearer of bad news, but I also don't want to set an unreasonable expectation.