I've never done what you are trying to do. Is it just an "academic" exercise, or is there an application of some kind?
I don't understand the purpose of the up/down counter in your design. It has nothing to do with integrating a sine wave. It is creating a triangle wave which you are then integrating with your accumulator (the register and adder)
An 8 bit A/D can represent a sine wave with and amplitude of +127 to -128. But, to get that you need to have 0000_0000 represent 0V, 0111_1111 represent max positive and 1000_0000 represent max negative. You just apply that to the accumulator (which is an integrator). You need to AC couple the sine wave into the A/D and bias it at mid scale. But, any offset will integrate to infinity. (most DSP applications think of the A/D as fractional values)
Think of accumulating a square wave that is +127 half the time, and -127 the other half. What will be the peak value in the accumulator? It will depend on the sample rate and frequency of the input. It will ramp to a max, and then back to the min. (BTW, your up/down counter is doing exactly that, integrating a +1, -1 input signal.). But, if there is any error in the dutycycle, it will ramp to infinity.