This is probably more of a Windows question than a Z20 question, but I figured I'd ask anyway.
 
The TOF sensor works perfectly to put my system to sleep/lock and wake/unlock.  However, when it does this, Window shuts down a ton of programs.
 
Any idea why this is happening and how I can fix it?  

I haven't tried to use any setting other than "dark" which just turns off the RGB lighting. it's possible that there may be differences in level of sleep and lock and how it responds to requests to sleep/lock/etc.
My guess is if it's locking the computer it's signing you out of the active account to get you back to the lock screen, which does turn off most of the programs that start up when logging in. As for shutting down, it might also depend on what your computer is set to do with it's given certain instructions, IE, when you press the power button is it set to sleep, or shut down? My guess is the ToF sensor is sending some signals like that, and depending on how your PC is set up, it might do different things when given the same instructions.