I had to assign favorite skills and items with “Toggle POV” key (default “ALT” key). The default key suggested by the game prompt, the “F” key did not assign or unassign favorites for me. So, if anyone else is having the same issue that is what I did. I pressed the Toggle POV key (ALT) instead of the F key, to assign my favorites.

Hopefully the Script Expander and SKY UI will be available on Nexus Mod soon, because I need my hotkeys.