Azure webapp: Site-to-Site VPN not working when used with webapp

"A local gateway with address space 172.18.96.76/32" is completely wrong.

The Local Network Gateway describes your LAN to Azure; it should contain your full internal address space, not a single IP address.

You should change it to 172.18.96.0/24 or 172.18.0.0/16 or whatever your LAN address space is.