Physicists are talking about theory of everything but their everything does not include life and consciousness. Unless these are included, you cannot have theory of everything. Following theory includes life and consciousness.
Your guess was "[1] unifying four interactions or [2] unifying quantum mechanics and general relativity." That sounds quite reasonable to me, but I'd like to hear from someone who is more knowledgeable in this area.
Unification of four interactions (that include gravity) seems impossible outside the quantum framework, so your [1] does assume [2]. Could you supply exact quote or a link? Otherwise, it's hard to guess.
I do not know precisely what Hawkins means, even if one can guess what it is from his other works. But I can give you my views on the subject.
1. QM is not a physical theory per se. As Niels Bohr said :
"There is no quantum world. There is only an abstract quantum physical description. It is wrong to think that the task of physics is to find out how Nature is. Physics concerns what we say about Nature." [Niels Bohr, Spoken at the Como conference, 1927].
QM is a set of axioms and computational methods about the formalism and the measures which can be done about physical phenomena. There is no physical interpretation of QM, which would require the introduction of new physical objects or properties. So QM encompasses the whole field of physics, whatever the scale.
2. General Relativity is comprised on one hand of a theory about the geometry of the universe, and on the other hand of a theory of gravitation. Introducing the geometry of GR in Physics can be done quite easily, even if in usual circumstances it does not change much the results. Introducing the theory of gravitation is more challenging, not least because it requires the geometric framework, which is not the one of the standard model. It can be done, however there are still many issues because we know little about the force fields, other than the EM field, and their propagation.
3. The unification of the 4 force fields (EM, gravitation, strong and weak interactions) is a great challenge. I am not sure that the usual way to view this is the right one. Actually we have 2 force fields (EM, gravitation) which are similar (they have infinite range and follow similar laws), as it has been noticed quite often. Meanwhile the weak and strong interactions are very different and are involved in a very specific context. And of course the introduction of the Higgs boson, which should be linked to a 5th field, muddles averything and leads even far away from the unification. So it would be logical and sensible to look first for the unification of gravitation and the EM field in the framework of GR.
This only means that one person, Hawking, searches for such a theory in two directions. Which is not really interesting. Other people search in other directions. One has to start to care about this once some guy has found something. But this will be in one way, not two.
The theory of everything (ToE), as science describes it, is the unification of gravity with the other three fundamental forces (the other three unified are a GUT).
General relativity (GR) is involved as a consequence, because once you have included gravity in the unification you have also included GR. Since it is a theory based on gravity.
The two more realistic ways to come to a ToE are both linked to quantum physics and are:
1) Gravity is governed by gravitons.
2) Gravity is governed by quantum space (space's quanta dynamics).
I don't believe in strings and extra dimensions, I choose the second hypothesis and I show how, by starting from a superfluid quantum space, you can:
1) unify all fundamental forces
2) include special and general relativity in the ToE
I updated my paper.
Article A superfluid Theory of Everything? [outdated version]
Please, read Lee Smolin, The trouble with physics, and then forget about the theory of everything. According to Smolin we seem to be further away from that theory than we ever thought we were.