It looks as though you have created a
Compute Engine VM and not an
App Engine application and are attempting to connect to the GCE (Compute Engine) instance via
VPN tunnel. This on the other hand is an App Engine specific
Google Group for general App Engine product discussions.
If you require Compute Engine specific technical support, it is recommended to post your question on
Stack Exchange using the 'google-compute-engine' tag. Alternatively, you can use the
Compute Engine Google Group to discuss GCE specific topics with the Compute Engine community.