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Steam writes the registery values in a location that the tool kit, patches and other tools can not find. Therefore they can not be installed. Iryan solved this problem within the DS1 Legendary Mod for Dungeon Siege 2 you may wish to ask him if it is possible to release this fix as a separate fix so that the tool kit can be installed on a system with a steam version of the game. I am not sure if that is possible but asking can not hurt.