@ehoke , Thanks for posting this question!
If I have understood your question correctly, with the two docs that you have mentioned -the default WebApp deployment goes fine, but the error occurs only when activating default virtual environment. Just to highlight, an App Service detects a Django project by looking for a wsgi.py
file in each subfolder (which then runs Gunicorn), which manage.py
start project creates by default. So, when App Service finds that file, it loads the Django web app.
Kindly use SSH or the Kudu console to connect directly to the App Service and verify that requirements.txt exists directly under site/wwwroot.
If it doesn't exist, make site the file exists in your repository and is included in your deployment. If it exists in a separate folder, move it to the root.
If your files exist, then App Service wasn't able to identify your specific startup file.