I have the same problem using XFCE on Ubuntu 17.10.  But Markus's
solution does fix the problem.

My setup is as follows:

In XFCE Power Manager under the security tab set:
Automatically lock the session to "Never"

Uncheck "Lock the screen when the system is going for sleep".

Under the display tab I still blank the screen after 15 minutes.  Put to
sleep and Switch off times appear to be disabled (greyed out).

Under the system tab I still have system sleep mode going to "Suspend" after an 
hour.
Interestingly the screen still locks when it suspends.

So everything still works fine and as I want it to. I get a full screen
white on black message when I activate the machine again telling me the
screen is locked and to wait a few seconds for a dialog box to appear.
Haven't seen that before but fine nonetheless.

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You received this bug notification because you are a member of Ubuntu
Touch seeded packages, which is subscribed to systemd in Ubuntu.
https://bugs.launchpad.net/bugs/1605189

Title:
  Authentication is required for suspending the system

Status in systemd package in Ubuntu:
  Confirmed

Bug description:
  Automatic suspend from the xfce power manager does not work, as a
  window opens and asks for my password. Well, if it wants to suspend
  the system after a given timeout, I cannot enter my password as I'm
  not in front of my system then. Once I'm able to enter my password it
  is too late to run the suspend action.

  The window asking for my password prints:

  Password: <field-to-enter-the password>

  Details

  Action: org.freedesktop.login1.suspend
  Vendor: The systemd project

  ProblemType: Bug
  DistroRelease: Ubuntu 16.04
  Package: systemd 229-4ubuntu7
  ProcVersionSignature: Ubuntu 4.4.0-31.50-generic 4.4.13
  Uname: Linux 4.4.0-31-generic x86_64
  ApportVersion: 2.20.1-0ubuntu2.1
  Architecture: amd64
  CurrentDesktop: XFCE
  Date: Thu Jul 21 13:13:12 2016
  EcryptfsInUse: Yes
  InstallationDate: Installed on 2014-08-17 (703 days ago)
  InstallationMedia: Ubuntu 14.04.1 LTS "Trusty Tahr" - Release amd64 
(20140722.2)
  MachineType: LENOVO 4236ML1
  ProcKernelCmdLine: BOOT_IMAGE=/vmlinuz-4.4.0-31-generic 
root=/dev/mapper/ubuntu--vg-root ro intel_pstate=enable
  SourcePackage: systemd
  SystemdDelta:
   [EXTENDED]   /lib/systemd/system/systemd-timesyncd.service → 
/lib/systemd/system/systemd-timesyncd.service.d/disable-with-time-daemon.conf
   [EXTENDED]   /lib/systemd/system/rc-local.service → 
/lib/systemd/system/rc-local.service.d/debian.conf
   
   2 overridden configuration files found.
  UpgradeStatus: Upgraded to xenial on 2016-05-28 (53 days ago)
  dmi.bios.date: 07/05/2013
  dmi.bios.vendor: LENOVO
  dmi.bios.version: 83ET76WW (1.46 )
  dmi.board.asset.tag: Not Available
  dmi.board.name: 4236ML1
  dmi.board.vendor: LENOVO
  dmi.board.version: Not Available
  dmi.chassis.asset.tag: No Asset Information
  dmi.chassis.type: 10
  dmi.chassis.vendor: LENOVO
  dmi.chassis.version: Not Available
  dmi.modalias: 
dmi:bvnLENOVO:bvr83ET76WW(1.46):bd07/05/2013:svnLENOVO:pn4236ML1:pvrThinkPadT420:rvnLENOVO:rn4236ML1:rvrNotAvailable:cvnLENOVO:ct10:cvrNotAvailable:
  dmi.product.name: 4236ML1
  dmi.product.version: ThinkPad T420
  dmi.sys.vendor: LENOVO

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