Hello,
While there is No Microsoft statement found that it is deprecated in UDE environment, My suspicion is that the Visual Studio Create Deployable Package action was originally designed around the LCS development model and may not be fully supported in a UDE workstation configuration yet.
Also, I noticed you are using this
D:\AOSService\PackageLocalDirectory\Bin\CreatePackage.Psm1
While historically its
D:\AOSService\PackagesLocalDirectory\Bin\CreatePackage.psm1 (plural "Packages".)
May be worth to give a try to run it manually just to make sure package created from VS is compatible,
Import-Module “D:\AOSService\PackagesLocalDirectory\Bin\CreatePackage.psm1”