Update: After a fresh reinstall and using VXKex to fool it as it were on Win10, It finally opened up without freezing (probably due to 2 more windows opening up on the top of Steam's) and an error message poped up saying SteamWebHelper is not responding (Steam's main window is still black), also giving me 5 different choices (Restart Steam, without GPU accel, without sandbox, restart SteamWebHelper, just exit Steam). Which of the first 4 would the most assertive workaround?
Another update: It ran fine without GPU acceleration, so I disabled it altogether while it was temporary off and now it's working fine again. It's currently running with VXKex on with the most up-to-date version and I haven't faced any other issue so far.
One more update: Tried Disabling VXKex to avoid problems with games and after the update, it's still working. So H/W accel was causing the system freezes.
Chromium's sandbox code was critically changed in the last year or so to become incompatible with operating systems before Bugcrash 10. Specifically, the sandbox on the GPU rendering processes was broken, which may be why the client was not functioning properly with the HW accel option enabled. I haven't been following the latest Steam clients and whatever version of CEF they use now, but it's probably dated after the breaking sandbox changes. You may be able to run the Steam client with the sandboxes disabled, depending on how many of the CEF feature switches are still honored by the current Steam client. I don't remember exactly which ones to look for, but you might be able to find them with a Google search. Then you could have partial GPU rendering of the vile Steam client and save your CPU from burning on all the CEF garbage, at the cost of no sandboxing ofc.
I tried many earlier versions from last year but they were all freezing my entire system. Strangely it wasn't happening at all until this month. At the same day I ran Steam 3 times in a row it froze on the last run and never ran again until I finally disabled H/w acceleration. It had always been turned on without any issues until this month. After the first freeze happened, no earlier versions would work either.
That is really interesting. Maybe something from a newer CEF was left behind when you installed older clients and adversely affected them. If you want to go back down that rabbit hole (I don't blame you if you don't want to), try any of the M86 CEF clients (December 2023 and earlier). IIRC it was the January 2024 client that moved to M109, which should be just fine on 7, but Valve uses their own fork of CEF with a variety of changes, and the M109 clients are the past Valve's "official" cutoff date for bothering to care about OSes before Bugcrash, so I can't say the M109 clients are known good configurations for HW acceleration working. The M86 ones are, though. Also really interesting that it was freezing your entire system. Maybe it wasn't related at all to current day CEF's incompatibility with NT 6.1 and was something else instead.
And what's even more puzzling about it is that I also did a complete system restore to the day it was working but the exact same thing happened afterwards.