I have done searches to figure out if this is the case, but have not been able to come up with anything. My question is simply this:

When I tether my bold, the connection works fine through the laptop. The problem I'm noticing is that the data connection through the browser or any apps on the phone itself is disabled/not available. Is this expected? Is there any way to get data on both my laptop and my bold simultaneously?

no, as it is using the connection elsewhere.

When it says "Modem mode enabled" on the phone, that means it acts like a modem - not a phone with data. Only phone features work as long as you are in a 3G coverage area. EDGE does not support concurrent voice and data.

I forget which release caused this problem but if you go to att .297, this problem does not occur