I have had troubles with "CFileSystem_Steam::Init() failed: failed to find steam interface" errors before which went away after I added a steam.dll to the folder. This worked for a few minutes, however, I suddenly faced a different error. I can launch portal from steam from my brother's library. But it has always been this way and so unless something has changed (in which case I will purchase the game) I have not changed anything.

you need to own the game on steam and have steam open

Ok. I had steam open and it used to work. I guess something changed!

thanks for the info