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Okay, I think I may have figured this out. The BIOS has a option called "enable/disable the S4/S5". I enabled it and now the motherboard consumes 0.3-0.5 watts while powered off. I'm not even sure what this does but enabled it does not seem to have any negative effects. I'm still not certain whey this MB consumes any power at all while powered off but 0.3.0.5 watts is better than 1.5 watts so I'll keep my settings like this for now.
Necbot, the system consumes the least power compared to all other sleep states when you enable S4 power state. The system is almost at an OFF state.
Yes it is strange that disabling S4 (hibernate) and S5 (soft-off) would consume LESS power !
Obviously, even powered down, the PSU is still drawing power for anything that needs it - so that the the on/off switch will work, any LEDs that are showing, possibly WoL, etc.
Also need to be wary of where you are measuring power draw, and what peripherals might be impacting that.
mb99 and sylvia_intel are correct, I enabled this feature, I did not disable it. I made a mistake in my original post, which I have now corrected.