Steam won't launch for me in xwayland-satellite here... I just assumed steam+wayland = broken. I have a kind of weird setup using sway with xwayland disabled and running xwayland-satellite though.
Try running xwayland-satellite in another WM like Niri and see if it works there – for example, Gamescope didn’t work well on Sway, crashing as soon as Steam tried to spawn another window, but it’s working fine in Niri.
