The problem is with the "Steam Overlay" evidently. Here's how to disable the overlay and get the game running properly:
In your Steam Library, right-click on the game in the Library list, and select "Properties" from the pop-up menu. In the "Properties" window, click the “GENERAL” tab (it may be selected by default). In the "GENERAL" tab, un-check the “Enable the Steam Overlay while in-game" box.