Python 2.6 + PIL + Google App Engine issue
What David Scott said is actually correct.
I had the errors blow running and couldn't for the heck of me couldn't resolve the issue no matter what patches I tried. What worked for me apparently, was simply changing the Python directory found on C:\python27_x64 and target the pythonw.exe file using the Google App Engine. 
FYI, I run with Windows 8.1

File "C:\Program Files\Google\Cloud SDK\google-cloud-sdk\platform\google_appengine\appcfg.py", line 127, in 
    run_file(file, globals())
  File "C:\Program Files\Google\Cloud SDK\google-cloud-sdk\platform\google_appengine\appcfg.py", line 123, in run_file
    execfile(_PATHS.script_file(script_name), globals_)
  File "C:\Program Files\Google\Cloud SDK\google-cloud-sdk\platform\google_appengine\google\appengine\tools\appcfg.py", line 5399, in 
    main(sys.argv)
  File "C:\Program Files\Google\Cloud SDK\google-cloud-sdk\platform\google_appengine\google\appengine\tools\appcfg.py", line 5390, in main
    result = AppCfgApp(argv).Run()
  File "C:\Program Files\Google\Cloud SDK\google-cloud-sdk\platform\google_appengine\google\appengine\tools\appcfg.py", line 2980, in Run
    self.action(self)
  File "C:\Program Files\Google\Cloud SDK\google-cloud-sdk\platform\google_appengine\google\appengine\tools\appcfg.py", line 5046, in call
    return method()
  File "C:\Program Files\Google\Cloud SDK\google-cloud-sdk\platform\google_appengine\google\appengine\tools\appcfg.py", line 3793, in Update
    self._UpdateWithParsedAppYaml(appyaml, self.basepath)
  File "C:\Program Files\Google\Cloud SDK\google-cloud-sdk\platform\google_appengine\google\appengine\tools\appcfg.py", line 3814, in _UpdateWithParsedAppYaml
    updatecheck.CheckForUpdates()
  File "C:\Program Files\Google\Cloud SDK\google-cloud-sdk\platform\google_appengine\google\appengine\tools\sdk_update_checker.py", line 243, in CheckForUpdates
    runtime=runtime))
  File "C:\Program Files\Google\Cloud SDK\google-cloud-sdk\platform\google_appengine\google\appengine\tools\appengine_rpc.py", line 424, in Send
    f = self.opener.open(req)
  File "C:\Python27\lib\urllib2.py", line 431, in open
    response = self._open(req, data)
  File "C:\Python27\lib\urllib2.py", line 449, in _open
    '_open', req)
  File "C:\Python27\lib\urllib2.py", line 409, in _call_chain
    result = func(*args)
  File "C:\Python27\lib\urllib2.py", line 1240, in https_open
    context=self._context)
TypeError: do_open() got an unexpected keyword argument 'context'
2015-02-08 17:42:53 (Process exited with code 1)
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I am using OS X 1.6 snow leopard and I successfully got PIL installed. I am able to open terminal and type import Image without any errors.
However, When using app engine I get Image error still saying that PIL is not installed. I am wondering if any of you have an thoughts as to how I can resolve this issue.
-Matthew