The reason the Generate Mod tool doesn't work in the non-Steam versions of the game is because of the lack of the "steam_api64" dll that is included with the Steam version.

The only way to make this work is to use that DLL which contains specific data for that game. I initially tried using a dll from another game to no effect, despite the same name.

The SD2 dll in question can be obtained from this link. Simply extract the dll into your main SD2 install folder (where your ModGen.exe is located) and you're good to go.

Happy modding!