Trying these right now thanks!

ETA: Verification did not solve it. Will try offline as was suggested. If that doesn't work will reinstall. Don't understand how it went from working perfectly fine to this.

Tried in offline and same error message. Thanks for the suggestion. Reinstalling now.

This.
Some areas are more affected than others but as a general rule avoid playing Steam games during free weekends or big sales unless you set up offline mode in advance.
I've been playing DAO (from GG/Origin) so it'll be a while until I touch one of my games on Steam but I noticed a couple of days ago that I had lost connection on the client, probably from all the people pre-loading MW3.

Seen this happen a few times. Usually when there is a sale on and the servers are getting hammered.

Try offline mode or change the server you are connected to.

To change server click Steam top left and select settings. This opens up a new window.

In there click downloads and cloud. At the bottom of that screen it shows you the server you are connected to. Use the dropdown and slect one that is closer or a near one that isnt in a hugely built up area. Then click ok and it will tell you to restart Steam to connect to the new server.

This works most the time as Steam connects you automatically to what it thinks is the closest server to you.

On the odd occasion mine has been connected to Germany even though I am in the UK!!

Steam isnt to bad, it has come a long way since its launch. Give it a chance and it will grow on you. Their sales are also really good when they have them.

All you can do is wait, nibble off the tips of your fingers and pray that it'll work sometime in the next few hours.

Or you can use offline mode, but it's a 80%/20% that this'll even work. If you haven't run the game at least once already, the chances of offline working drop dramatically. If you can get offline mode working, you'll have to do without achievements and such like then, but the game will work.

Hence why I'm waiting for the retail release at the end of the month here in Germany to see if it is Steamworks free.

It isn't

http://en.wikipedia.org/wiki/List_of_Steam_games

Alan Wake has achievements so it is a Steamworks title, when you install it no doubt it is going to ask for the key in a Steam window tying it to your account.

Been playing it a bit today and reached Episode 3, so far its really good but you do spend one hell of a lot of time in the woods at night so far. The story and writing are fantastic.

Kind of reminds me of the first 2 Silent Hill games which are equally as good. I hope they keep releasing this franchise on the PC.

Don't think that's something to go by really. Heck Sims 3 Master Suite is on there. Sure, all games on there may use Steamworks, but not all games are exclusive Steamworks for all versions.

It is Steamworks mate.

Tech Power Up done a news article on it towards the end of January this year :

http://www.techpowerup.com/159207/Alan-Wake-to-Use-Steamworks-MSR-Given-Out-Slated-for-February-2012.html

You are right in what you are saying though, some games that require steam arnt steamworks. You tend to find some of the older games on there fit this.

General rule of thumb now though is that if a game has achievements then it is going to be a Steamworks title.

My son has been playing Team Fortress 2 a lot lately, an he gets this message all the time. It illustrates very well why putting an extra layer between the customers and their games is a bad idea (for the customer at least).

Oddly enough, I fired up TF2 and it plays just fine. Downloaded it last night with Alan Wake.
Downloading and reinstalling Alan Wake again atm since nothing else I have tried seems to work.

You could have tried just deleting the games exe file first off instead of removing the whole thing. Steam would have downloaded it again automatically when you done a verification check. May have worked for you.

Sorry I forgot to mention this, would have been worth a shot

Destroy the blob!

In all seriousness, if retsarting the client doesn't work, delete clientregistry.blob in your steam folder and restart steam. It often fixes annoying issues like this. It did for me when I got this message for Sonic CD.

It sounds to me like Steam couldn't reach their verification servers due to the MW3 free weekend. This is the most stress Steam has to suffer since the Xmas sale you just had bad luck.

During the chrismas sales you can hardy get a game installed during the first 3 or 4 hours of each new sale, due to the massive demand. They are upgrading them each time however. During my "first" chrismas sale in '09 it was much worse.

While I'm waiting for this to re-download and to show my appreciation for everyone's help; everyone who has or does post in this thread is entered in a giveaway:

For one copy of any one of these three.winner's choice: Age of Wonders I, II & III

Winner will be determined by the random number generator at random.org