Prior to the test, was the battery dead or disconnected for some reason?

If so, the "monitors" in the engine computer must regain their
"knowledge base" and that is done by driving the car for a week or so
including at least 15 miles at 55 to 60 (not above) on the freeway.
The monitors record the performance of the catalyst, air injection etc
and need X number of driving cycles to accumulate sufficient
information, dealer can tell you the exact driving cycle needed to
satisfy that requirement.

I just went through this in Calif. Engine was fine but car failed due to
insufficient number of valid monitors due to battery having been changed
just before the SMOG test. Ten days later all monitors were valid and it
passed.

Computer are never at fault. I suggest you let the dealer check out the car.
Independent rarely have proper tool to fully test out the car.

He probably asked several thousands of dollars to do the repair... No
stinking way. He just want your money. Take car elsewhere to have it
inspected.

I had a similar problem when I disconnected my battery for repairs a week
before I went in for the smog test.  If your battery has been disconected
(and thus the computer has been reset), you have to drive the car enough for
the computer to have a chance to report and store any problem codes.  If
manufacturers didn't build in this requirement, many people would just
disconnect their batteries to clear any possible bad codes before heading
the testing station ;)  Mercedes informed me that I needed to drive 100
miles after I disconnected the battery.  They said normal driving was fine
and did not tell me of any requirement for driving at any specific speeds
for any specific period of time was required.

As also seen by other responses, "Not Ready" is an indication, that the
computer has not yet gained enough knowledge about the condition of the
engine, possibly because it has been reset due to disconnected battery.

This "feature" was introduced on purpose to prevent reset of the
computer as a means to pass the smog test, when engine is not in good
enough condition.

Are you sure, that your mechanic knows what he is doing, and that he
really spoke to the dealer?

I think it is quite unlikely, that the computer itself creates the
problem.

And the computer is not cheap!