Steam is awesome and it's done more for PC gaming than any large chain branded brick-n-mortar game store ever has. It's also one of the better digital game stores around, the only ones that really compare are Impulse and GOG. It craps all over EA, Ubisoft and Direct2Drive's digital offerings.
Also, millions of people run steam and have zero issues with it. I find it very difficult to see how steam, which is all built on-top of an open source web-browser engine, would damage your machine to the point that you'd need to rebuild it. It's much more likely Games For Windows Live killed your system as that's also required for DOWII and it hooks into parts of the system for DRM that it really shouldn't be and can really mess things up. Steam's inbuilt DRM is much more passive and doesn't hook into any system level stuff for verification.
If a game requires Steam it's probably using Steamworks
for multiplayer or in-the-cloud
save games, like Modern Warfare 2 ect.
That being said, I can understand why people are apprehensive towards steam, but if you embrace it there's a heap of benefits. Think of it like Xbox Live or the Playstation Network, it's the game service the PC has been lacking and that Microsoft has failed to create.