Glad to hear you were able to resolve your issue @NuuuFt. I will say, it's not customary to reference a web app project in that manner. So, by creating a new library with your logic that can be shared by both the function app and the web app is the right way to go.
However, if these two projects live under the same solution, then using a project reference directly should have still worked. If you referenced the ProjectName.dll by path, then you would need to make sure that binary was set to Copy to output folder via the Properties Visual Studio. Based on your error message, this wasn't done, and the runtime was looking for the dll in a folder that doesn't exist on the Azure Functions platform.