Activated but undoscoverable

Are you able to check if private files are properly configured?

I though they was.

Set it for a folder marked private below the web folder.

$settings['file_private_path'] = '../private';

If that's not the proper way to point to a folder outside the docroot let me know.

Yes, this should work.
You could check for issues in /admin/reports/status or /admin/config/media/file-system
Also, you can check if making directories in private dir is possible, something like

$file_system->prepareDirectory($directory, FileSystemInterface::CREATE_DIRECTORY);

Maybe you hit issues with openbasedir (note here: https://www.drupal.org/docs/8/core/modules/file/overview → ).

Maybe you could check if dir is created before and after enabling activitypub on one account with:

ls ../private/activitypub/
ls ../private/activitypub/keys

Maybe you could try to create the directory before enabling activitypub account on user profile.

Will give it a shot.

Also I am running Nginx instead of Apache for my web server if that helps.

The keys and other requires files in Private have propagated now.

Now to figure out why it's not searchable.