After hours of testing, I have finally isolated a service running in Windows 7 that prevents the Duo from going in energy saver mode. If you have a fitbit and the associated application (Fitbit Manager), it starts a Fitbit Uploader service. Any time this service is running, it prevents the DUO from going to sleep. The moment this service is stopped, it behaves again, and goes to low energy mode(blue light). Hope this helps someone else from doing all this work to figure out the root cause of this issue. It also seems to interfere with the network connection status.
I am having UPnP issues with the DUO and a linksys E4200(v2), so I had to manually set up port forwarding for the remote access to work on the DUO. The E4200 UPnP appears to be working and was working fine until the DUO entered the network. Hopefully Linksys or Wester Digital will do more testing and work out the bugs. Both devices are very new to the market.