Batman: Arkham City Cheats
Is there a way to fix this problem or is my retail version of Arkham City screwed?
If you have it via Steam, when installed Steam will stick registry items for the game in the registry, so when you click on a link to start the game it knows it needs to go through steam.
If you try with a retail copy with the steam copy installed, without installing and hitting play it will want to go through steam cause that is what it is set at, and if steam isn't running then it won't start and give you that error message.
In short you can't install both a retail copy and digital copy at the same time.
I bought the retail version when it was released back in November. When Steam had their summer sale I decided to buy the Steam version in case anything happened to my retail version.