My new copy of half life 2 episode one had this particular problem ( my pirated copy of HL2 didn’t =) ) and after fluffing around on the internet I found a solution. It appears that you have to make steam validate the files manually, rather than validate them when it’s trying to run. You have to go into the game details tab ( double click on the game entry in the game manager ) and click ‘validate’.

You may also have to delete the clientregistry.blob file from the steam directory and then restart steam, or add the options ‘-engine ep1′ to the launch options menu.