It's possible that a later Virginia legislature officially endorsed the separation of West Virginia (as if they had any choice by then). Lincoln may have treated the rump VA legislature as legally entitled to act for the state, but I don't think Congress treated it as a valid state government in other respects. Economically, Virginia is probably better off without its lost counties.
Congress (the real, U.S. one) agreed to seat the two U.S. Senators elected by the loyalist government of Virginia, so yes indeed Congress recognized that state government as legitimate.