I mostly fixed the problem. I was messing around with specifying the “public_html” folder for that user and when I deleted the ftp user it deleted the public_html dir (as I read in other posts) - that’s why I was getting that error.
So now I can create the standard Wesite FTP user. However, by default my Virtualmin is making this user’s shell /dev/null, when it should be /bin/false. I simply changed that under Users/Groups so now I can login fine.
But how do I tell Virtualmin to give a Website FTP user a default of /bin/false for a shell each time I create a new Website FTP user. It should have been setup out of the box to do that. Maybe I changed one of the defaults somewhere?