steam is telling me that my version is outdated and I should download a new version.- (even after running the updater)
How without losing all settings? Is that all stored in ~/.steam so all straightforward?
Re: update steam
Before redownloading Steam, try making sure your entire system is up to date.
Open Ubuntu's dash, and type in "Software Updater". Click it and let it update your system. Restart your computer, and then try to update Steam again. Does the problem persist after this?