You need to specify the environment variable first to disable the runtime:
STEAM_RUNTIME=0 steam

Can you show the output of that?

Also, the commands to do the strace output were wrapped badly on the forums. The correct commands are:
STEAM_RUNTIME=0 strace -f steam 2>&1 | grep "open(" >/tmp/steam_runtime_disabled.txt
STEAM_RUNTIME=1 strace -f steam 2>&1 | grep "open(" >/tmp/steam_runtime_enabled.txt

Thanks!

After you get the output of those commands, can you see if this sequence of commands works?
xhost +; steam

Runtime=0

dan@BrickTamland:~> STEAM_RUNTIME=0 steam
Running Steam on
STEAM_RUNTIME is disabled by the user
/home/dan/.local/share/Steam/ubuntu12_32/steam: error while loading shared libraries: libXdmcp.so.6: cannot open shared object file: No such file or directory
Installing bootstrap /home/dan/.local/share/Steam/bootstrap.tar.xz
Installing breakpad exception handler for appid(steam)/version(1359765526_client)
Installing breakpad exception handler for appid(steam)/version(1359765526_client)
Installing breakpad exception handler for appid(steam)/version(1359765526_client)
Installing breakpad exception handler for appid(steam)/version(1359765526_client)
Running Steam on
STEAM_RUNTIME is enabled by the user
Installing breakpad exception handler for appid(steam)/version(1359765526_client)
No protocol specified
No protocol specified
updateui_xwin.cpp (482) : Assertion Failed: Could not open connection to X
Assert( Assertion Failed: Could not open connection to X ):/home/buildbot/buildslave_steam/steam_rel_client_ubuntu12_linux/build/src/steamexe/./updateui_xwin.cpp:482

Installing breakpad exception handler for appid(steam)/version(1359765526_client)
Uploading dump (in-process) [proxy '']
/tmp/dumps/assert_20130202163151_1.dmp
success = yes
response: CrashID=bp-6eb06179-401e-4642-8c01-8c0092130202
main.cpp (369) : Assertion Failed: failed to intiialize update status ui, or create initial window

Runtime=1

dan@BrickTamland:~> STEAM_RUNTIME=1 steam
Running Steam on
STEAM_RUNTIME is enabled by the user
Installing breakpad exception handler for appid(steam)/version(1359765526_client)
No protocol specified
No protocol specified
updateui_xwin.cpp (482) : Assertion Failed: Could not open connection to X
Assert( Assertion Failed: Could not open connection to X ):/home/buildbot/buildslave_steam/steam_rel_client_ubuntu12_linux/build/src/steamexe/./updateui_xwin.cpp:482

Installing breakpad exception handler for appid(steam)/version(1359765526_client)
Uploading dump (in-process) [proxy '']
/tmp/dumps/assert_20130202163554_1.dmp
success = yes
response: CrashID=bp-85492552-9aad-4cf6-8e8c-481712130202
main.cpp (369) : Assertion Failed: failed to intiialize update status ui, or create initial window
Installing bootstrap /home/dan/.local/share/Steam/bootstrap.tar.xz
Installing breakpad exception handler for appid(steam)/version(1359765526_client)
Installing breakpad exception handler for appid(steam)/version(1359765526_client)
Installing breakpad exception handler for appid(steam)/version(1359765526_client)
Installing breakpad exception handler for appid(steam)/version(1359765526_client)
Running Steam on
STEAM_RUNTIME is enabled by the user
Installing breakpad exception handler for appid(steam)/version(1359765526_client)
No protocol specified
No protocol specified
updateui_xwin.cpp (482) : Assertion Failed: Could not open connection to X
Assert( Assertion Failed: Could not open connection to X ):/home/buildbot/buildslave_steam/steam_rel_client_ubuntu12_linux/build/src/steamexe/./updateui_xwin.cpp:482

Installing breakpad exception handler for appid(steam)/version(1359765526_client)
Uploading dump (in-process) [proxy '']
/tmp/dumps/assert_20130202163600_1.dmp
success = yes
response: CrashID=bp-e6778fd0-a520-432e-b9f4-e303b2130202
main.cpp (369) : Assertion Failed: failed to intiialize update status ui, or create initial window

I'll post the steam_runtime_enabled and steam_runtime_disabled in the next two comments

runtime disabled:
https://gist.github.com/4699475

runtime enabled:
https://gist.github.com/4699490

xhost +; steam worked for me and steam is now working. thanks a lot

It looks like both of those files were with the runtime enabled.

Can you run "xhost -" and try again?
Also, can you show the output of "echo $XAUTHORITY", and "ls -l ~/.Xauthority"?
Thanks!

Oh, I see, you are missing some libraries that would allow you to run steam without the runtime. No worries, can you just give the xauthority info?

Sorry for the delay.

echo $AUTHORITY:
/var/run/gdm/auth-for-dan-mK9PoH/database

ls -l ~/.Xauthority:
-rw------- 1 dan users 126 Sep 3 23:58 /home/dan/.Xauthority

What was the problem with the earlier info? I could run it again if you'd like. Just let me know how I can help.

Was that $AUTHORITY or $XAUTHORITY?

Hello, I have the same issue. If it can help you somehow:
straces: https://gist.github.com/4700713

echo $XAUTHORITY
/var/run/lightdm/eyenie/xauthority

ls -l /var/run/lightdm/eyenie/xauthority
-rw------- 1 eyenie users 54 Feb 3 09:49 /var/run/lightdm/eyenie/xauthority

ls -l ~/.Xauthority
ls: cannot access /home/eyenie/.Xauthority: No such file or directory

Steam works with STEAM_RUNTIME=0 steam or after xhost +;
Not works, if just write steam; and after xhost -

@eyenie, does it work if you do ln -s /var/run/lightdm/eyenie/xauthority ~/.Xauthority?

No, it doesn't work.

ls -l ~/.Xauthority
lrwxrwxrwx 1 eyenie users 34 Feb 3 11:08 /home/eyenie/.Xauthority -> /var/run/lightdm/eyenie/xauthority

steam
Running Steam on opensuse 12.2
STEAM_RUNTIME is enabled automatically on opensuse
Installing breakpad exception handler for appid(steam)/version(1359765526_client)
No protocol specified
No protocol specified
updateui_xwin.cpp (482) : Assertion Failed: Could not open connection to X
Assert( Assertion Failed: Could not open connection to X ):/home/buildbot/buildslave_steam/steam_rel_client_ubuntu12_linux/build/src/steamexe/./updateui_xwin.cpp:482

Installing breakpad exception handler for appid(steam)/version(1359765526_client)
Uploading dump (in-process) [proxy '']
/tmp/dumps/assert_20130203110925_1.dmp
success = no
error: HTTP response code said error
main.cpp (369) : Assertion Failed: failed to intiialize update status ui, or create initial window
Installing bootstrap /home/eyenie/.local/share/Steam/bootstrap.tar.xz
Installing breakpad exception handler for appid(steam)/version(1359765526_client)
Installing breakpad exception handler for appid(steam)/version(1359765526_client)
Installing breakpad exception handler for appid(steam)/version(1359765526_client)
Installing breakpad exception handler for appid(steam)/version(1359765526_client)
Running Steam on opensuse 12.2
STEAM_RUNTIME is enabled automatically on opensuse
Installing breakpad exception handler for appid(steam)/version(1359765526_client)
No protocol specified
No protocol specified
updateui_xwin.cpp (482) : Assertion Failed: Could not open connection to X
Assert( Assertion Failed: Could not open connection to X ):/home/buildbot/buildslave_steam/steam_rel_client_ubuntu12_linux/build/src/steamexe/./updateui_xwin.cpp:482

Installing breakpad exception handler for appid(steam)/version(1359765526_client)
Uploading dump (in-process) [proxy '']
/tmp/dumps/assert_20130203110942_1.dmp
success = no
error: HTTP response code said error
main.cpp (369) : Assertion Failed: failed to intiialize update status ui, or create initial window

It was echo $XAUTHORITY

@TheHollowCops, @eyenie, please send me e-mail at [email protected] if you'd like to try to debug this live with me.

Debugged and fixed for the next release! Thanks guys!