With Giovanni van Bronckhorst's side trailing 1-0 in the opening leg of their third-round qualifying clash against Royale Union, a VAR intervention resulted in a late penalty.
After reviewing the pitchside monitor, match official Irfan Peljto penalised Connor Goldson for a shot which deflected onto his arm from close range.
Dante Vanzeir converted the spot kick to give his men a two-goal advantage ahead of the second leg clash at Ibrox next Tuesday.
The penalty award "baffled" McCoist, although the former Rangers manager and striker acknowledged the visitors' poor performance.
He told talkSPORT: "I can't argue at all with the result, just about second to everything and deserved what they got.
"It was really concerning, a very poor performance but the penalty decision is absolutely shocking.
"It was an absolutely terrible decision - as bad as Rangers' performance.
"I have to balance it and say Rangers were really poor and didn't deserve to take anything out of the game.
"But that's what really annoys me about VAR. Are these people for real?
"You're looking at it and who in their right mind thinks that's a penalty?
"It's important that you have people who are making these decisions that have played the game to a certain level and understand it."
He continued: "It baffled me, absolutely baffled me. I don't want to take anything away from the result and performance, which was poor and I don't have a problem with the actual result.
"But that decision? Come on. You're sitting looking at it on a monitor.
"If he'd seen it in normal time and given it, I'd have given him a bit more space and leeway.
"But when you go over to a monitor and look at it, and still give it…?"