Django virtualenv layout
This goes to the very heart of how you use virtualenv: cd to the virtualenv directory, then activate it (or the other way around - it doesn't really matter). The usual way to do this on linux (or cygwin) is to source ./bin/activate/ from inside the virtualenv.
At that point, if you use pip or python they will be local to that virtualenv. You should only perform your installations, and run your stuff after activating the virtualenv.
So, to answer your question: switch and activate before you start to install or do anything. Do everything inside the virtualenv, with it activated.
I am very new to django. I just have a very basic question about project layout using virtualenv. When we create virtualenv and install all the dependencies-django etc, do I need to switch my directory to the virtualenv and then create a project there? Or do I need to create my project outside of virtualenv. I apologize if it is a very basic question.