It seems that you are missing the ~/hlds/half-life/steam file. Try the
following and see what happens:

cd ~/hlds/half-life
wget http://storefront.steampowered.com/download/hldsupdatetool.bin
chmod u+x hldsupdatetool.bin
./hldsupdatetool.bin
./steam
./steam -command update -game valve -dir /home/hlds/hlds/half-life/
-verify_all


--
Andy


On Wed, 21 Jan 2009 10:54:03 -0000, "Daniel Reinhardt"
<crypto...@cryptodan.com> said:
> Below are the results.
> 
> h...@capricorn:~$ ls -Al ~/hlds/half-life/steam*
> -rw-r--r-- 1 hlds hlds 31372850 2009-01-21 08:50 
> /home/hlds/hlds/half-life/steamclient_linux.so
> h...@capricorn:~$ cat ~/hlds/half-life/valve/steam_appid.txt
> 70
> h...@capricorn:~$
> 
> -Daniel
> --------------------------------------------------
> From: <valvesoftware....@dynamicbits.com>
> Sent: Wednesday, January 21, 2009 10:48
> To: "Half-Life dedicated Win32 server mailing list" 
> <hlds@list.valvesoftware.com>
> Subject: Re: [hlds] [S_API FAIL] SteamAPI_Init() failed; unable to update 
> local steamclient. Continuing with current version anyway.
> 
> > What is the output of the following commands?
> >
> > ls -Al ~/hlds/half-life/steam*
> > cat ~/hlds/half-life/steam_appid.txt
> >
> >
> > --
> > Andy
> >
> >
> > On Wed, 21 Jan 2009 09:04:57 -0000, "Daniel Reinhardt"
> > <crypto...@cryptodan.com> said:
> >> h...@capricorn:~/hlds/half-life$ ./hlds_run -autoupdate +map crossfire
> >> +ip 192.168.1.2 -maxplayers 16
> >> Auto detecting CPU
> >> Using Pentium II Optimised binary.
> >> Auto-restarting the server on crash
> >> Could not locate steam binary:./steam, ignoring.
> >>
> >> Console initialized.
> >> Protocol version 48
> >> Exe version 1.1.2.1/Stdio (valve)
> >> Exe build: 18:05:13 Oct 24 2008 (4383)
> >> STEAM Auth Server
> >> couldn't exec language.cfg
> >> Server IP address 192.168.1.2:27015
> >> [S_API FAIL] SteamAPI_Init() failed; unable to update local
> >> steamclient. Continuing with current version anyway.
> >>
> >> couldn't exec listip.cfg
> >> couldn't exec banned.cfg
> >> Adding master server 68.142.72.250:27010
> >> Adding master server 69.28.151.162:27010
> >> Connection to Steam servers successful.
> >>    VAC secure mode is activated.
> >>
> >> I am getting the above error that is red, and bolded.  If anyone can
> >> help me out, so I can get rid of that error.
> >>
> >> It is a brand new HLDS install on the following:
> >>
> >> CPU: P4 3Ghz 800FSB
> >> Cooler: Zalman Fatal1ty FS-C77 CPU
> >> Mobo: Asus P4P800 SE
> >> CASE Antec SOHO
> >> RAM: 512x(4) Kingston ValuRAM
> >> GPU: 6800XT
> >> PSU: Antec TP 400
> >> Mon: Dell Ultrasharp 24"
> >> OS: Ubuntu 8.10
> >>
> >>
> >> Thanks,
> >> Daniel

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