To be honest, I'm not familiar how to deal with Steam installs and mods for SH3. I always install by DVD. Forumuser Blitzkrieg made extensive guides on how to fix install problems. You may want to search for that.
To start:
http://www.subsim.com/radioroom/showthread.php?t=212323
http://www.subsim.com/radioroom/showthread.php?t=218598