I am running Xubuntu 17.10, I upgraded from 17.04. When I open laptop lid, it stays in blank screen. Power is on, wired mouse doesn't get power, it doesn't respond to anything. I tried pressing keys and pressing power button. I always have to restart my laptop to use it. Xfce Power Manager says that it locks screen when lid is closed.
The laptop lid is one of the lingering issues with Linux on laptops, at least with Ubuntu. I usually have to go into the settings you are describing and fiddle with them until I find a configuration that I'm satisfied with.
For the purposes of troubleshooting, I would recommend asking XFCE to "Do Nothing" when the laptop lid is closed - don't suspend, don't turn off the screen, nothing. If it works, it will be a little weird, because the lid will be closed by the screen will be on.
After that, if you are able to open the lid and everything is working, I would recommend trying the "Blank screen" option. It's like pressing the power button on an external desktop monitor - shouldn't change anything about how the OS is running - browser should stay open, downloads should continue, etc. Perhaps "blank screen" is sufficient for your needs, in which case, you're good to go.
Otherwise, you will want to experiment with the "Suspend," "Sleep," or "Hibernate" options. Honestly, even with Windows, I find these to be more trouble than they're worth. The terms are used interchangeably, even though to the OS and to the BIOS the terms have very specific meanings. For instance, see "S1" and "S3" modes. This is a bit more involved to figure out which power state you want, exactly. If you really need this feature, I would read and become more familiar with the definitions of the different power states and how your OS deals with them.
Good luck, enjoy Xubuntu. I enjoy it quite a bit for older laptops.
I had the same issue.
what solved it for me was choosing a different option when the lid is closed in [Power Manager -> General -> Laptop Lid].
"Suspend" seems to do what you'd expect (put laptop to sleep on lid close, and wake it without issues on screen open), whereas "Lock Screen" seems to have those issues you were describing.