.Net API in IIS (Azure VM) not browsing

Question

I have a .net 4.8 api which is getting deployed in IIS (azure vm). The vm is domain joined and the app pool is using application pool identity.

When I deploy it, post that I am unable to browse the api swagger.

Here are some details:

1. I manually create a port 80 binding but cannot browse the api created under the site

2. VM is domain joined

3. App pool identity used

4. If I set physical path in Basic Settings for site I get an error: "The specified user name does not exist"

Tasks IISWebAppManagementOnMachineGroup@0 and IISWebAppDeploymentOnMachineGroup@0 used for deployment in release pipeline.

Edit 1: Yaml

//params and variables defined while calling stage

baseUrl: mysite.com
RootPath: 'D:\myapp\${{ parameters.baseUrl }}'
VirtualApiPath: '/API'
Workspace: '$(Pipeline.Workspace)/'
PackageName: '/drop/xxx/MyAPI.zip'

- task: IISWebAppManagementOnMachineGroup@0
  displayName: 'Manage Web Application'
  inputs:        
    IISDeploymentType: IISWebsite 
    ActionIISWebsite: 'CreateOrUpdateWebsite'
    WebsiteName: '${{ parameters.baseUrl }}'
    WebsitePhysicalPath: '${{ parameters.RootPath }}'
    CreateOrUpdateAppPoolForWebsite: true
    AppPoolNameForWebsite: 'MyAppPool'
    PipeLineModeForWebsite: 'Integrated'
    AppPoolIdentityForWebsite: 'ApplicationPoolIdentity'

- task: IISWebAppDeploymentOnMachineGroup@0
  displayName: 'Deploy Web Application'
  inputs:
    WebSiteName: ${{ parameters.baseUrl }}
    VirtualApplication: '${{ parameters.VirtualApiPath }}'
    Package: '${{ parameters.Workspace }}/**/${{ parameters.PackageName }}'
    TakeAppOfflineFlag: true
    XmlTransformation: true
    XmlVariableSubstitution: true