you have to open the computer files and manually delete whats left in there after uninstalling the game, then open your documents and delete the sh4 folder there, then its safe to reinstall the game.
see info here:
http://www.subsim.com/radioroom/showthread.php?t=133290
(ignore the info there about vista and where to install the game, just let it install itself normally)
i dont know why people like steam so much, they are not a company i would ever buy from and most who do will get screwed over at some point, its just a matter of when