also comes up with this

According to RPT logs the actual Game's connection to Steam is working fine. So just the Launcher isn't working right.
I don't think I have ever seen anyone install Steam to the Desktop 🤔 that might be related

All my other games work fine

Amd wdym by installing to desktop

Arma is reporting that Arma - and presumably also Steam - is installed directly in the desktop folder of your user profile. As in, the actual game installation is located on your desktop, not just a shortcut to it.

Installing entire programs directly to your desktop is not really recommended, not just in Arma terms but, like, at all. It's best to use a dedicated folder somewhere on your hard drive; the Windows default is its Program Files folders, and that's a perfectly fine place.

If Arma is not actually installed directly on your desktop, it's probably worth checking on why it thinks it is.