Your Steam Library folder is in the Program Files folder, and Windows has rolled back your SH4 DW config, resulting in a mish-mash of files in your game folder. You will need to put SH4 in a non-program files folder. How many other Steam games do you have? Refer to
Moving a Steam Installation and Games for a couple of procedures to use to accomplish that. If all you have of Steam is SH4, then un-installing SH4 and Steam, and then re-installing it all into a folder you create yourself, such as "C:\Games" or similar, and making that the install target, will allow you to then get a good mod activation. You will have to empty your C:\Users \UserName \Documents \SH4 folder before playing also.
