Strangely I get this too...and mine's not the steam version, though I did get the ToV expansion through Steam and (it could be a coincidence, but) this error has only shown up since the ToV expansion was installed via steam.
I find if I exit to windows and retry, it typically logs on as usual. Sometimes I have to try a couple of times.
I have no idea why the steam version should be looking for the DVD in your case...but now I've read your post I'm wondering if the issues are related.