They should have given the utility a different name, like Power Manager or something. Here I’ll refer to either the PP, Power Panel or Sony utility.
The Sony utility, when running, handles the system power options under PP Power Schemes and Alarms. It adds dynamic control based on the application being run with user selectable control of the optical drive, memory stick, fan, cpu and timings. I really don’t know if a PP profile will override the Sony utility, but I suspect not. If you turn on Alarms in PP, you’ll may well have double alarms.
THe PP Power Meter tab simply determines whether you have the icon in your system tray. You get the same status window integrated into the Sony utility.
The PP Advanced options do make a difference. They set the default options for lid close and power button. The Sony utility will override lid close if the power scheme requires a different action. For example, turning off display on lid close rather than allowing hibernate or standby.
Since hibernation requires disk space XP gives the option of enabling it. I have no idea how the Sony utility would deal with this should you turn it off. If it’s off, PP Advanced options removes standby from the list of options.
Note: if you turn turn hibernation off, it changes hibernate to standby in the Advanced options. Should you re-Enable it, you will also have to reset your Advanced settings.
I realize I’ve only provided partial answers. Perhaps someone here has frittered away the time to see who wins when PP and the Sony utility conflict.