To switch Steam into VR Mode you need to take the following steps. These instructions are valid as of this
- Install the Oculus Runtime. You can find it here. You will need the runtime even for DK1 devices.
- Switch the Rift Display Mode to Extend Desktop to the HMD.
- Change the display orientation for the Rift DK display so that the screen is wider than it is tall. In some tools that's called Landscape and in some it is called Portrait, but in either case the width should be 1920 for DK2 or 1280 for DK1.
- Install SteamVR. It is in your library under Tools
- Select Virtual Reality Mode (BETA) from the View menu in Steam
A common source of problems on Windows is that the OVRService_x64 process does not always keep running. You may need to run it manually. By default it is installed here: C:\Program Files (x86)\Oculus\Service
If you have any trouble getting SteamVR running, it would be helpful for you to post your vrserver.txt and vrclient_steam.txt log files. You can find these under the logs directory in your Steam directory on Windows.