After installing the steam versions of the game. I would next unzip the framework in the directory as you said then I could put mods like the legendary mod into the mod folder, In my case it would be a copy and paste from my non steam directory right?
It needs to be unzipped into the Dungeon Siege 2 folder where steam installed it, typically C:\Program Files (x86)\Steam\SteamApps\common\Dungeon Siege 2.
Then use the "Steam DS2 Mod Launcher" shortcut to play. This shortcut or a copy of it can be placed anywhere on your PC. If you installed your steam games somewhere else than the above default, it will be necessary to edit the shortcut to reflect the changed installation path or the shortcut won't work. Other reasons for the shortcut failing to work could be a missed required dll or similar.
Mods will then need to ideally be placed in the new Mods folder (there's already the DS2 map menu fix included there for convenience).
Additionally the multiplayer options will now be available.
For the Steam version of DS2, AllSaves has been renamed to SteamDS2AllSaves and will not work with the retail box version of DS2. Nor for that matter will it work with the original Steam DS2 exe which has been left unchanged. Any feedback, comments, complaints, etc, about this version of AllSaves needs to be directed to me and not Elys as its a special version modified for use for the Steam version of DS2 by her kind permission.
Using the shortcut will also change where the game keeps saved games, configuration files, screenshots, etc. These will now be in the installed Steam DS2 location, where a new mods folder will be located as well. Ideally place mods into this folder and not the resources folder.
The above is necessary to prevent a possible "Smart Heap out of memory error" where SteamDS2AllSaves attempts to parse saved games from the original exe. By keeping the saved games separate prevents this error from occurring. This is far from confirmed and may only apply to my system which now has both the retail box version and steam version installed and before SteamDS2AllSaves, both were using Documents\My Games to store gamed games and configuration files. Feel free to experiment.
After installing the steam versions of the game. I would next unzip the framework in the directory as you said then I could put mods like the legendary mod into the mod folder, In my case it would be a copy and paste from my non steam directory right?