Easiest solution is to install a login manager like sddm, then it should "just work" on your login, startx doesnt do all the same things a proper DM would do.

You might be able to have wallet ask for your password just once after login using startx, or you might have an easier time using gnome -keyring, but either way I don't think unlocking it with pam is an option for the startx method

You could go passwordless. If you go into System Settings > KDE Wallet > Access Control (tab) you can tell Plasma to show a prompt for access attempts. Then click on "Launch Wallet Manager", there open the wallet and select "Change Password". Leave it blank and confirm. Your wallet is now prompting you when an app wants to access it (for the very first time, not after you granted access once). No password is required ever.

pam_kwallet doesn't get run on tty logins. By default it's only added to display managers/greeters. You can add it to the relevant login file in /etc/pam.d and it may work, I'm not sure, there's some ordering needed where you need to be halfway in a graphical session.

The code seems to bail if it doesn't detect a graphical session: https://invent.kde.org/plasma/kwallet-pam/-/blob/master/pam_kwallet.c?ref_type=heads#L222

Dont run with startx lol. Thats a known issue.

Why do you do that, to use XOrg while there is no option in SDDM?

Look at /etc/sddm.conf

I think that only works with a desktop manager like sddm. Though then you'd have to enter the password on sddm.