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Generally, when a library is in use, nobody else can use it. So -- not a bug, it's intentional.
HOWEVER, there appears to be a bug with Free2Play games blocking access to libraries even though they are free games, and there might be another bug when playing an owned game might be treated as playing the shared game that happens to be in a library.
So, for Dota2, which is a Free2Play game, this is a bug.
Not so much a "bug" but a feature that has not been implemented yet.
Free 2 Play games count as games in your library. Maybe in the future they'll update it so they do not count. Heck, maybe that's why they did so much the last few weeks with updated Free 2 Play games as not counting toward your profile game count.
But for now, they are games in your library and disable your library sharing while being played.
Saying it's a bug is misleading. It's just a feature that has not been implemented.
Is this means if the owner is playing any of the games, automatically all his/her games is blocked from sharing. If I read it properly in the FAQ, i thought only 1 person allowed to play any specific game in the library?
They may be online in invisible mode, or someone ELSE may be playing a game from their shared library.
When you apply some Physical logic to this, it really doesn't make one bit of sense. I literally slammed a stack of Wii U games on my roommate's desk, I said go ahead grab one. Once she picked up Pikmin 3, I flinged the whole remaining stack against a wall and said "now I can't play Super Smash Bros"
With all of the verification required to enable the feature and both PCs are under the same IP Address, Why is this limitation even in place? This is an artificial limitation that defies logic. This would be like BlockBuster locking down the whole store because there is one movie out.
Not the Steam Account itself but its entire library.