The update has broken the Fallout Script Extender (FOSE), a popular tool required by more-advanced mods. One big issue: you might want to avoid updating if you play FO3 modded. Might need to dig save files out the old GFWL folder too. If you already had FO3 installed on Steam, Bethesda suggest uninstalling and reinstalling to get it to play right. Unofficial tools have let players get around this before, but now it's just gone. GFWL has been dead for a while but the game still required it and would take a while trying to log in on startup. Bethesda started selling Fallout 3 without GFWL on GOG last year, so it's good to see Steam catch up.

Yup, it seems they've stripped GFWL from the regular edition too, obvs. The Steam announcement says plain and simple that Fallout 3 GotY 'no longer requires Games for Windows Live' and 'no longer installs Games for Windows Live dependencies'. However, avoid the update if you play FO3 with lots of mods. Hooray! FO3 is still busted because Bethesda haven't updated the game to run happily on modern Windows, but I'll take any opportunity to dance on GFWL's grave. After 13 years, Fallout 3 has finally removed Microsoft's reviled (and broken) Games For Windows Live service from the Steam release.

Fallout 3 running mod