Android - Can I use my Android device as Wi-Fi Adapter for my PC (i.e. Tethering to PC through USB, but using Wi-Fi not Phone Network)?

You can achieve this natively on some versions of Android (for me it works on KitKat 4.4.4). All you have to do is connect the phone to wi-fi as usual and then connect the USB cable and do a USB tether. Some devices may require you to enable WiFi sharing in the mobile hotspot settings. Your computer should detect a new hardware - a "USB ethernet" or similar, you may need to install drivers for that, ymmv. Then it behaves just like any other network card. This works for all common operating system, including Windows (where the drivers part may apply).

Just to be sure, you can disable mobile data on the phone for the time being but the phone should be smart enough to route traffic via wifi automatically when it is available.

No root needed.

PDANet claims to be able to do this. Other phones, such as my Sidekick, do this out of the box.

You can do this using PdaNet.

From KnowYourMobile.com:

To use your Milestone as a mobile broadband dongle, you will need:

• Motorola Milestone USB Drivers
• PDANet Tethering Software ($15.95 to buy right now, limited trial also available)

Step I:

• Tap the upward pointing arrow on the Milestone's home screen to get to the app menu
• Tap the Settings icon
• Tap Applications
• Tap Development
• Check the box for USB debugging

Step II:

• Install the PDANet software on both your PC and Milestone -- when installed on the desktop, it should automatically install the USB driver for you but if it doesn’t, you will have to use the driver you downloaded above.
• Connect your Milestone to your PC via USB, then launch PDANet on your device Click on "Turn PdaNet On" on the Milestone Right-click the PDANet icon in the taskbar on your PC, then click Connect