Same error message.
Here is some new information. When I clicked on the 'R' icon inside the system folder, it says 'the application has failed to start because Steam.dll was not found. reinstalling the application may fix this problem.'
you can fetch that steam.dll from your main steam folder and copy it over. But thats not the reason for the problem.
I really cant think of anything else now than a software exploit between some hardware. Inside steam did you try disabling the "enable steam community in-game".
Another test for the moment.
Can you atleast start the game up
if you change:
[Engine.Engine]
RenderDevice=D3D9Drv.D3D9RenderDevice
;RenderDevice=D3DDrv.D3DRenderDevice
;RenderDevice=Engine.NullRenderDevice
;RenderDevice=OpenGLDrv.OpenGLRenderDevice
;RenderDevice=PixoDrv.PixoRenderDevice
to
[Engine.Engine]
;RenderDevice=D3D9Drv.D3D9RenderDevice
;RenderDevice=D3DDrv.D3DRenderDevice
;RenderDevice=Engine.NullRenderDevice
RenderDevice=OpenGLDrv.OpenGLRenderDevice
;RenderDevice=PixoDrv.PixoRenderDevice
that will use the openGL renderer.
I'm off to bed but tomorrow i'll try and help some more and ask around a bit.