The Steam version should be compatible as it's the same game as the disc version. The difference is that you download it with Steam. As for the game version I don't know as I have the disk version of the game.
One thing to note is that Steam installs under Program Files (maybe you can change that, but I'm not sure). The downloaded games are installed under Steam which is under Program Files, so you can't adjust the conf.ini settings that way. If you want to adjust the conf.ini settings you'd need to do some things differently than the default Steam install way, but I can't help you further with this as I don't have the 1946 Steam version.
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