Did you do a manual reboot after changing the environment? I recommend always doing that. From your Community Cloud admin panel, where you see your apps listed, click the three dots to the right of your app and select reboot.
Can you share the output of the console after that clean reboot to see if there are any messages about environment setup? Also, can you link your GitHub repo? Sometimes there are trivial typos in a filename like package.txt instead of packages.txt, so it’s good to verify those details, too.
It was actually an issue with the structure of the directory. Moving the packages.txt file to the root directory as mentioned in the Streamlit docs helped clear this error.
Thank you for your suggestions, I believe these will be useful for users when they are trying to debug an error.