not really. You can manage any non steam game through steam if you just want to lauch it from there but you can't activate it through steeam and you won't be able to play it on any pc or redownload it later from steam.
yeah it just updates the game. frequently when a game is released it doesn't work perfectly with all setups so they go back and release a patch to make it work better on more systems. You should always patch a game to the latest version if you are having problems
go to this page: http://www.gamespot.com/pc/strategy/medieval2totalwar/download_6170145.html?om_act=convert&om_clk=files&tag=files;title;3 and download the patch and install it. Also are you absolutely sure your drivers are up to date? I don't want to offend you or anything but if you didn't know what I meant by patch the game, I doubt they are. If you have a nvidia graphic card new drivers were released less than 1 month ago.
do you want realism or cartoony? Single player or Multi? Sid Meiers Pirates! is the gold standard. Pirates of the Burning Sea is excellent if you want an mmo.
that seems like an error. Even integrated chips can run pixel shader 3 nowadays. Either your computer is extremely old or something isn't right. I would try updating your graphic drivers, and patching the game. if that doesn't work then reinstall it.
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