Hi
hqtanned, I've UX331UA. I remember there was issue with ATK Package (ASUS Kerboard Hotkeys) older than 1.0.0060. With 1.0.0060 closing display lid does nothing. Of course if set to do nothing in power settings. I set display lid close action to sleep on battery and to do nothing on AC.
With older ATK Package, if I recall correctly, and I hope I do, closing the lid was forcing sleep mode disregarding lid close action in power settings. You may try killing corresponding ATK service using task manager to check if it affects display lid close action or not. Start Youtube movie with sound and check if lid close cancels sound and makes power LED blinking. Don't remember which service it was, perhaps just kill them all with ATK-prefix. Fn+F7 still behaves wrong in ATK 1.0.0060, it oddly forces sleep mode. Fn+F7 should just turn off display, not switch to sleep mode.
Edward