Drone CI/CD has Login Failed. Invalid Response on my VM

This is expected because Drone is running on port 80 inside the container, and because you configured nginx to handle ssl, not Drone. When you set DRONE_SERVER_PROTO=https you are not configuring ssl for Drone, you are just telling Drone that its public address uses https. Drone needs to know its public address so that it can create Bitbucket webhooks.

This error indicates making API calls to Bitbucket to authorize the user failed. Have you looked at your Bitbucket Server logs to see if you can get any more details regarding why it returned an error? I also recommending searching this forum for relevant threads, for example this thread may be relevant.