Try verifying local files for the game, or exit and restart the Steam client to make sure you have the latest version.
You can start the game directly from the '..\SteamApps\common\Divinity - Original Sin\Shipping\EoCApp.exe' program file to avoid the popup, though that would disable the Steamworks functions (inviting a Steam friend, tracking time played, etc).
The version number is listed in the main menu, at the bottom of the list of buttons (latest is 1.0.47). It is also shown if you right click on the program file, select Properties and switch to the Detail tab.
Try manually installing the VC Redist Package from the _CommonRedist folder in the install folder, and see if that prevents Steam hang during the first time setup.