Optiplex GX260 Power Management

I have an Optiplex GX260 that was delivered with Windows XP Professional.   For most of the time I've had it, it went into standby  automatically and I coud wake it up by pressing a key on the keyboard.

About two years ago, I wiped it and installed XP Home -- at which point it refused to go into standby automatically.  I could do a manual standby but it never would put itself into standby.  When I forced it into standby, the keyboard would reactivate it as it always did before

Over the weekend, I installed Windows 7 Home Premium on the machine and I've run into yet another curiosity.  The machine does go into an altered state automatically  now but it's not really sleep (I can still hear the fan) and I can no longer wake it up with the keyboard:  I have to press the power button to bring it back.  Does anyone have any idea why that is?  FWIW, the keyboard is attached via the PST adapter.  Would a USB keyboard make a difference?

Thank you.