I think you're talking about a macOS app, right, not an iOS app?
are you the account owner? Only the account owner (not a mere admin) can create certificates and profiles for managed entitlements. Xcode can't make it automatically, and the developer portal's feedback is unhelpful on this issue.
I think you want a signing certificate for Developer ID, not for Apple Distribution. The latter means on the app store, the former means you distribute it, and it is signed by a registered developer, and that signature is notarized by Apple.
On the Xcode side, you leave the signing set to "Automatic", and go through the steps to make an archive. Once you have an archive, open the Organizer window, select your archive and click Distribute App. In the next dialog, select Developer ID as the method of distribution. A dialog will come up offering you the choice of automatic or manual signing. Choose manual.
In the next dialog, pick appropriate Certificates and Profiles for the app and its extension. The profile you pick for the app is special - this is the one that your Account Owner has to create. You probably don't need a profile at all for the driver extension.
Click Next, review your certificate and profile choices, if you are happy, upload to the notarization server and wait a little while. Good luck!