Release Agent Configuration necessary for Web App Add task - powershell

Question

To create a directory under and add a web app to IIS, I put this script in Azure DevOps Server Deployment Group job Powershell task:
New-Item -Path "C:\inetpub\wwwroot" -Name "MyNewApp" -ItemType "directory" `
C:\Windows\system32\inetsrv\appcmd.exe add app `
/site.name:"Default Web Site" `
/path:"/MyNewApp" `
/physicalPath:"C:\inetpub\wwwroot\MyNewApp"`
When this task runs it throws an error: (timestamps removed for clarity)
APP object "Default Web Site/MyNewApp" changed
ERROR ( hresult:80090016, message:Failed to commit configuration changes.
Keyset does not exist )
After executing the above code from a Powershell console while logged in as either myself or the service account, the following messages are returned:
APP object "Default Web Site/MyNewApp" added
VDIR object "Default Web Site/MyNewApp" added
I can confirm in IIS Manager that the directory and application was created.
I cannot reproduce the error in a console. It is only when it is running as the Release Agent and initiated through the DevOps Server web interface that this error occurs.
I have tried the following:
Keyset Issue - https://support.microsoft.com/en-us/help/977754/keyset-does-not-exist-error-message-when-you-try-to-change-the-identit for both the Local Service and service accounts.
Up-to Modify permissions on C:\inetpub\wwwroot for the service account
Adding the service account to IIS Manager Permissions
Update 1:
I determined the "Keyset does not exist" error was coming from trying to use the DefaultAppPool application pool as part of the setup. This application pool was not setup with the service account but was still set with default Application Pool Identity.
However, after making this change I have a new error:
APP object "Default Web Site/MyNewApp" changed
ERROR ( hresult:80070057, message:Failed to commit configuration changes.
The parameter is incorrect. )
...
Process 'appcmd.exe' exited with code '87'.
Any guidance is greatly appreciated.
Update 2:
I logged an issue with Microsoft community that is currently being looked at. You can see it here.

Answer 1

You could also look at the .net implementation with the servermanager:
https://learn.microsoft.com/en-us/iis/manage/scripting/how-to-use-microsoftwebadministration
https://learn.microsoft.com/en-us/dotnet/api/microsoft.web.administration.servermanager?view=iis-dotnet
Should not be very hard to use this in powershell.