pychonic (Lead Sourcemod Developer) spent the last hour troubleshooting the issue with me and found a solution. For anyone else wondering here it is:

In your Steam client folder (same as steam.exe) copy steamclient.dll, tier0_s.dll and vstdlib_s.dll to the server's bin folder (which is in same directory as srcds.exe. Then restart the server.

Big Kudos to pychonic for his patience!

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