I know of only one way that this can happen in windows, and has nothing to do with Steam other than their not-so-great decision to install all content into Program Files.
If you are on Windows 7 or Windows Vista, and you have UAC set to ON, then change it later to OFF, this can happen.
UAC does thing evil thing where if a program tries to write to a "protected" area like Program Files, EVEN IF YOU ARE ADMINISTRATOR, when you get a UAC prompt and give permission, it actually writes any files that would normally go into that directory into a "virtualized" directory somewhere else.
If you turn off UAC, that will no longer happen, and as an awesome bonus, it will no longer know about the files that it virtualized.
So in your case, if you had UAC on, installed a ton of games, then later got sick of UAC and turned it off, this would happen as you described.
See the second paragraph in "Features" in the article on User Account Control.
If you have done this and turn on UAC again, your content will come back, but be a TOTAL mess because if you've downloaded more stuff with UAC off, then that will be invisible when you turn UAC on, and vice versa.
this drove me a little crazy once before I realized what was happening.
i'm curious to know if this is your issue.
It doesn't say it, but the screenshot folder option only affects the uncompressed copies:
In order to change the location where Steam saves the compressed screenshots (which Steam can upload to Steam Community and are saved in the remote folder) you will either need to install Steam elsewhere or use some symlink trickery:
1. Delete or rename the existing default folder Make sure that [remote] folder doesn't exist inside your [userdata/id/760] folder.
2. Launch CMD as admin : Press Win+X there you will find an item option to launch Command Line with Admin privileges and write the following command.
mklink /D [Steampath]\userdata\[id]\760\remote "N:\ew\path\to\Screenshots\"
And that's it, now you can see your screenshots inside that folder.
This is how to do it in Windows (source), for Linux, swap mklink /D to ln -s
Best Answer
You can delete the appcache folder every so often. This just contains data which is cached, it does however get re-downloaded when you restart steam, but the folder size is no where near as big. I freed up 200MBs by doing so, then the next time I launched steam, it became 1MB.
Another option is to right click the steam folder, click on the "Advanced" button and compress the contents of the folder and sub-folders.
Like sn0w had said, you should also delete redist files if you don't need them.