To fix it, I used the following:
Blank key shell from eBay $6.25 delivered
Key cutting at a local hardware store $3.80
A flathead screwdriver
My rotary tool for cutting (you can use other/hand tools)
Some nail polish remover
Step 1: Get the Immobiliser Chip From the Old Key
The immobiliser chip was in the location shown in the above photograph (on the right-hand side). It was glued in place with some kind of glue that I could not easily remove. I cut out the section around it using my rotary tool and soaked it in nail polish remover over night. The next day, I was able to remove the chip easily.
Step 2: Cutting the New Key and Putting It Together
The new key needs to be cut by someone that is skilled in cutting car keys. If they make a mistake, or the copy is not accurate, you'll be up for the cost of a new key! In my case, I used the local hardware store where I have always had keys cut without any problems. To test whether the key is cut correctly, it should open the car door and it should turn the ignition. You'll find that the starter will begin working, but the engine will not turn on until the immobiliser chip is in place.
Because of its shape, there is only one way the immobiliser will fit into its location in the new key. Fig 2 has the chip fuly inserted where it should go. Although this picture does not show it, the black rubber sheet covering the buttons from the inside should also be in place. You can see it in place in Fig 1.
Next comes the remote control mechanism. It should be inserted with the buttons facing the back rubber sheet and the label facing you (Fig 3). In my case, because of the shape of the mechanism, there was only one way to insert it.
After pressing the back cover of the key until it clicks in place, you have a brand new remote key for your car.
Athough this is specificaly for a Toyota Yaris, you will find many blank keys on eBay for various makes and models of cars. Please be careful that this only works where you have the original key and all its internals.
Nice to save a couple of hundred bucks :-)