Yeah, the Sleep key is still set to "Power Key".
The update software disabled the key entirely. Pressing any other special hot key (Volume, Mute, Media, Back, Calculator, et al.) while the Microsoft Keyboard control panel is open and in front brings up a dialog box asking me what I want to set it to do. The Sleep key does nothing even then.
This is frustrating. The Sleep key is the only special hot key that I actually use on this keyboard and now it won't work.