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Or just ask Granny yourself. Or YouTube.
That's a retail solution, and the Steam version is slightly different to retail.
Ummmm.... try compatibility mode and running any executables directly?
It's connected to RAD Tools, in other words it will be required to play the BIK movies
The devil is in the detail: the path is messed up, check the message carefully: C:\ ! WINDOWS ! \Program Files(x86)\Steam\steamapps\common\Medieval 2 Total War\granny2.dll
Do you actually have Steam installed in the C:\Windows directory? Or just Medieval2 Total War? Follow up what is happening in the windows path.
In fact every article that contains your phrase (incorrectly installed) had the same windows path. Inardesco forgot to add 'medieval total war' to his search criteria - it would have been easier to find:
https://www.google.nl/search?ei=MDlOWrmLJ42QvQSl17CgCw&q=granny2.dll+medieval+total+war&oq=granny2.dll+med&gs_l=psy-ab.1.0.0i22i30k1l2.98294.98903.0.101436.4.4.0.0.0.0.222.441.2-2.2.0....0...1c.1.64.psy-ab..2.2.440...0.0.jfVl72OSzGc
The path in my machine is C:\Steam\steamapps\common\Medieval II Total War
So maye if op has a 2nd hard disk available, you should be completely fine if you install steam on that one. Just copy your already installed games somewhere, uninstall steam, reinstall steam on other hard drive, copy in your games and when you launch, steam'll check all files and might even be willing to fetch your missing dll.