Fix M1 Air: working after water damage EXCEPT Keyboard and Trackpad?

Have you opened the device up yet? That would be step one. Although liquid damage can be instantaneous, depending on where water went there may still be liquid somewhere on the internals. or minor corrosion that should be cleaned up. and you'll want to know where water went.

My thoughts are that this is probably related to either the trackpad, the keyboard, or both. Water gets into the trackpad area fairly easily since there's not a whole lot keeping it out.

There is also small board mounted to the top case, under the trackpad, which the keyboard connects into that could have seen some liquid. That board connects to the trackpad and handles some trackpad function and the majority of keyboard function. So I'm expecting your issue is going to be in that area. If you're lucky, the trackpad will be the only issue. If you're not as lucky, the little board on the top case might also have some water. Both parts are replaceable, but the little trackpad board can be difficult to source independent of the top case (which you may need to replace anyway if the keyboard itself is damaged)