https://bugs.winehq.org/show_bug.cgi?id=38114
--- Comment #6 from Béla Gyebrószki gyebro69@gmail.com --- (In reply to Rosanne DiMesio from comment #5)
I just tried Steam in an XP VM. The dropdown list does not appear there unless additional locations are added first via Settings, Downloads, Steam Library, so the behavior in vanilla Wine matches the behavior in Windows. Steam's Linux client behaves the same way.
IMO, the bug is in wine-staging for allowing you to do something you couldn't do in Windows.
Well, I don't have Windows installed so couldn't try it, but the native Linux Steam client does *not* behave as plain Wine: it does offer the drop-down menu even though only ~/.local/share/Steam is present by default in Settings>Downloads>Steam Library.
Let it be invalid then...