Ok, I've got steam version too and I really wanted to use this mod, and after a lot of digging and trial and error i found a way to make it work.
First things first, go into your steam/steamapps/common/medieval 2 folder, you'll see 3 .exes, a kingdoms, a launcher, and a m2. Create a new folder called backup (or whatever) and place the launcher.exe in that folder, then rename the kingdoms.exe to launcher. Once this is done, go into your mods folder where you installed kingdoms grand campaign and find the medieval2_kingdoms_grand_campaign_mod.bat (it looks like a window w/ a gear in it) and right click and select "edit" this should open it up in word/notepad whatever you have, in it you'll see something like "cd ..\..
Ignore the first 2 parts, and copy the "@mods\kingdoms_grand_campaign_mod\medieval2.kingdoms_grand_campaign_mod.cfg"
note that this should match the correct path to your installation folder of the mod and the name of the cfg file located in that folder. Now, open up steam and go to your games tab. Find medieval 2 kingdoms, and right click it and go to properties. Under the general tab you should see a button that says "Set Launch Options..." click that, and in the blank field that pops up paste the "@mods\kingdoms_grand_campaign_mod\medieval2.kingdoms_grand_campaign_mod.cfg" with out the quotations. (again, make sure it's the correct path for your install, the example i'm giving you is my install path) and click okay and close out. Now, double click kingdoms in the game list and you will bypass the launcher and start a regular medieval 2 game w/ the kingdom mod enabled. Lot of work, but so far it's the only way i've gotten the mod to work for me. A downside is that you can't play the original kingdoms campaigns w/ out reverting the changes you made to the kingdoms.exe and bringing back the normal launcher, but then you can't play the mod so you're just gonna have to switch back and forth to play whichever one you want to. You also can't start a game from the medieval 2 game in your steam list, it will just hang up on load (again, this is fixed by reverting all the changes you made).
Now, on to some bugs I encountered. I've been having the same "campaign movement lag" that some others have reported, but over time it has disappeared, it first started off where my game would hang for a second and then my characters would teleport to the location i told them to move, but now they seem pretty smooth and i don't get much of a hangup. This was never a problem for npc movement during their turn, they all acted normal.
Second, I tried doing a custom battle between Portugal and Jerusalem, but the game locked up right after the battle loads. I haven't done a real battle (only quick battles) in my campaign yet, but I'm afraid I'll have the same problem (lock up on battle load) but I'll go test that now and let you know what happens.
Other than that, I'm loving the mod, great work!
Edit - just tried a real battle on the normal campaign and it worked fine, must have been something w/ the custom battle itself (or perhaps the Jerusalem faction.) And no, you don't need to dl retrofit, it's all included in this mod.