I have the following structure in my solution:
Proj1
–> Proj2
–>Newtonsoft.JSON

I am packing Proj1 as a nuget and I want it to contain both Proj2.dll and Newtonsoft.JSON

My Proj1 looks like this:

Project Sdk="Microsoft.NET.Sdk">

  <PropertyGroup>
    <TargetFramework>net8.0</TargetFramework>
    <ImplicitUsings>enable</ImplicitUsings>
    <Nullable>enable</Nullable>
    <GeneratePackageOnBuild>True</GeneratePackageOnBuild>
    <Title>xxx</Title>
    <Authors>xxx</Authors>
    <Company>xxx</Company>
    <TargetsForTfmSpecificBuildOutput>$(TargetsForTfmSpecificBuildOutput);CopyProjectReferencesToPackage</TargetsForTfmSpecificBuildOutput>
  </PropertyGroup>

  <ItemGroup>
    <ProjectReference Include="..Proj2Proj2.csproj" PrivateAssets="All">
      <ReferenceOutputAssembly>true</ReferenceOutputAssembly>
      <IncludeAssets>*.dll</IncludeAssets>
      <Private>True</Private>
    </ProjectReference>
  <Target Name="CopyProjectReferencesToPackage" DependsOnTargets="BuildOnlySettings;ResolveReferences">
    <ItemGroup>
      <!-- Filter out unnecessary files -->
      <_ReferenceCopyLocalPaths Include="@(ReferenceCopyLocalPaths->WithMetadataValue('ReferenceSourceTarget', 'ProjectReference')->WithMetadataValue('PrivateAssets', 'All'))" />
    </ItemGroup>

    <!-- Print batches for debug purposes -->
    <Message Text="Batch for .nupkg: ReferenceCopyLocalPaths = @(_ReferenceCopyLocalPaths), ReferenceCopyLocalPaths.DestinationSubDirectory = %(_ReferenceCopyLocalPaths.DestinationSubDirectory) Filename = %(_ReferenceCopyLocalPaths.Filename) Extension = %(_ReferenceCopyLocalPaths.Extension)" Importance="High" Condition="'@(_ReferenceCopyLocalPaths)' != ''" />

    <ItemGroup>
      <!-- Add file to package with consideration of sub folder. If empty, the root folder is chosen. -->
      <BuildOutputInPackage Include="@(_ReferenceCopyLocalPaths)" TargetPath="%(_ReferenceCopyLocalPaths.DestinationSubDirectory)" />
    </ItemGroup>
  </Target>
</Project>

My Proj2 looks like:

<Project Sdk="Microsoft.NET.Sdk">

  <PropertyGroup>
    <TargetFramework>net8.0</TargetFramework>
    <ImplicitUsings>enable</ImplicitUsings>
    <Nullable>enable</Nullable>
  </PropertyGroup>

  <ItemGroup>
    
    <PackageReference Include="Newtonsoft.Json" Version="13.0.3">
      <PrivateAssets>All</PrivateAssets>
    </PackageReference>
  </ItemGroup>

</Project>

However, my output .nupkg does not contain Newtonsoft.JSON, just Proj2.dll

What am I missing?