I found a fix in the Steam forums:
[QUOTE]You need to close steam, delete remotecache.vdf (located in the games userdata folder) and then restart steam. When you run the game a popup should appear asking you to either download the cloud files or upload the local files.[/QUOTE]
You have to have steam cloud turned on for Dead Island for it to work. It worked for me and I'm back to playing. Thankfully...I hope they fix this problem soon...
[Edited by Draco856, 9/12/2011 5:42:44 AM]
I think this is what you mean...
I looked in the "Program files (x86)-Steam-userdata-(not posting my user number)-91310(which I believe is the number Steam gives this game), and there is that file there. Next you say I have a choice to download the cloud files or upload the local files, but you don't say which to do... I assume I should download the cloud files. Is that correct?
I don't want to lose my level 50 Purna character and all her stuff!