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Could you, by any chance, provide a screenshot?
Most people have in Settings > Interface "Notify me about additions or changes to my games, new releases, and upcoming releases" as Disabled. If you have that enabled, try disabling it and trying to launch games again. If it still happens, it's clearly related to the game(s) you're playing and likely any associated launcher(s) or possible adware infections on the system.
Yes I already had the "Notify me" box unchecked, but I double checked it to see if the update enabled it again, but it was still unchecked.
To be clear:
Normally (previously), If I clicked on the the Steam shortcut on my desktop, the main Steam UI would open up with associated popup ads. I didn't mind because I was intentionally accessing Steam. Again prior to latest update, when I opened (started) a game from a shortcut on my desktop for the first time each day, I would get the small panel saying, "Steam checking for updates" and then :Initializing Steam". That small panel would then disappear, and the game starting panel would be there. At that point, if I checked down in my taskbar (Windows 10), there would be a small Steam icon which I could click on and open a specific panel in Steam (Discussions, Store, etc.). Now what's happening is starting a game fully opens Steam UI with the popup ads. The games I've tried are No Man's Sky, The Long Dark, Scum, and Conan Exiles.
Can you take a screen shot of what you are referring to?
I have never seen ads, except for the one Mad Scientist mentioned and that was easily disabled from happening on startup. I am aware of no other "ads."
It seems that behaviour has changed.
The "ads" OP is referring to are likely the start up news items, yeah. They can be disabled in the settings, OP.
No actual ads here.
Those startup news items are the ones displaying in the center screen popup dialog that announce new game releases; and announce games having sales. So yes: actual ads.
Not the ones showing in the What's New bar on top of the library, which tend to predominantly have a more newsworthy flavor with actual stuff to read and take notice of. (Aside from the occasional announcement of 'try our other newly released but unrelated game' which is abuse by the publisher/developer of the news feature; a violation of their agreement with Valve; and should be reported, afaik.)
The OP said they had those turned off, so shouldn't be getting that. Hence why I asked for a screenshot, for clarification on the issue.
They also said they specifically already went to double-check that setting to verify whether the update maybe flipped it back on again. Which kind of already indicates that what they're getting on screen are the ads that normally should be controlled by that setting, no?