Steam: "Cannot create a file when a file already exists"

I’ve installed Democracy 3 via the Steam client, having run the client using “Run As Administrator.” When I try to play the game, I get this error: “Cannot create a file when a file already exists.” Then the game fails to start.

I’m running Windows 7 Home Premium 64bit and I’m logged in as a user that has Administrator privileges. I deleted all Democracy 3 local data from my main Steam apps folder using the Steam Client. I then re-installed Democracy 3 into a new Steam library location that I created inside my Documents folder using the Steam client.

This newly created “SteamLibrary” folder has permissions for both the “Administrators” group as well as for my specific Windows user account (which is a member of the Administrator group.) When I click on the Democracy 3 shortcut – or press play from within the Steam Client, or “Run As Administrator” the actual Democracy 3 application file – the game creates a folder called “My Games” in the Documents folder. This “My Games” folder has permissions for both the Administrators group and my individual Windows user account.

I’d come across a posting that said Democracy 3 tries to write a log file to this “My Games” folder when it starts. My installation does not create any such log file even though it successfully creates the “My Games” folder itself. Please advise some plan of action as I don’t know what else to try; note that I’d also tried “Verify Integrity of Game Cache” from within the Steam Client. I’ve purchased this game through Steam and have never had it work. Thanks.