Seems that the only thing that would actually fix it was a nuke and pave. Glad to see the support i got from valve was absolutely useless. Only saving grace for steam is all my steam games are backed onto my server so all I had to do was copy them over, verify them once steam was installed and I was good to go. Unfortunately the same can't be said about the Witcher 2 through D2D, which I have to completely redownload even though I have it the folder in which the game installed to.
Did you ever try making a guest/secondary user account, give it admin privileges, and install it via that account? A similar thing happened to me as well, and doing that worked. Don't know why--probably more a windows thing than a steam thing.