I could understand the other way around - it might send packets in the hope of receiving them but cannot if the wrong security password is in use. Anyway, change the password in the 'phone's Portable Hotspot and enter the new one in the PC when prompted. If you don't know the phone's password, it doesn't matter. You set it and can just as easily change it for another.
You might also let the PC's firewall defences down for about ten nano-seconds for experimental purposes. Much longer than that and you could be at risk./
You are right, it is sending packets instead of receiving them (my bad). But the wifi password is correct, and it isn't an issue in USB tethering which doesn't need a password. I tried disabling my firewall also, but it didn't help. I'm totally at my wits end here :S.