This worked for me on Win7 x64, YMMV:
Exit Steam
Find the DS3 .exe in Steam\steamapps\common\dungeon siege iii
Note it doesn't have the DS3 icon
Rename the .exe, to say Dungeon Siege IIIOld
Start Steam and wait for it to grab the .exe again
Note that the .exe now has the right icon
Play...
Hope this helps,
Rich