I've also confirmed that it's the adapter. When I unplug the Ethernet cable there's no problem.
I also completely removed the homegroup on both PC's. One being my main PC running win 8.1, the other running win 7. I unshared all folders on both PC's. But the no sleeping issue persists. What's more frustrating is that even after manually putting the Win 8.1 PC to sleep, it continues to be woken up. So I have to completely power the pc down every time I'm done with it, which is terribly annoying. As other's are having this issue also, I'm hoping that somebody from Microsoft will determine the proper fix and push an update. But as Microsoft has yet to address this posting, I have little faith.