Just got Windows 7 too on 2 computers winth LogMeIn(free). On one, intaller never gave me the option of turning off the option to prevent going to sleep. De-installed and re-installed LogMeIn (free), and still that option never shows up.
On the other computer, installation gave me the option, and Win7 can sleep normally.
Looked throu all the configurable options in LMI, as well as in the registry for various items, and I can't find a way to change that option back. Various configurable places to setup Win7 sleep mode also came up negative.
When sleep mode is activated, when the screen goes black and the power is about to be shutdown at the end of the cycle, the computer suddently comes back to life.
I'm seeing some of the same problems with laptops in my organization that are running LogMeIn. About 50% of the time, when I put them to sleep, the screen fades blank but the computer never goes into sleep state -- hd access and power lights are still on. After about 10 minutes the power goes off and upon restart Windows reports a blue screen occured:
"DRIVER_POWER_STATE_FAILURE (9f): A driver is causing an inconsistent power state"
What worked for me was:
1. disable WAKE ON LAN features in LogMeIn preferences
2. disable power management for all network adapters ("allow windows to turn off to save power")