Haven't used Gamersgate myself, but an explanation of it can be found here. For Greenhouse, I've bought three games from them, and in all cases the demo file contained the full game but required a code to unlock it (naturally received upon purchase). When unlocking the games my firewall detected the games trying to call home, but they still activated just fine even with my firewall blocking them, so it doesn't seem like any kind of remote activation is required (likely the phone home was purely for collecting install base information).

they don't use .gcf's for non-source games, they didn't even use them for l4d.
they use a different format, which doesn't matter anyway, because the entire game is actually installed there anyway so you can modify the files.

Steam DRM has nothing to do with using GCF or not, GFC is just a big zip like archive file very similar to the WAD files used buy ID games.

that's nice, I wasn't addressing steams drm, I was addressing michaels misunderstanding.

I misunderstood then...
I thought that you were impliying that, as Steam don't use GCF for non-source games those games were also the "raw game from the publisher" like they are on Gamersgate. I was just answering that saying that even if the a game don't use GCF it still as the Steam DRM attached to it.

yeah, most certainly, michael through the encrypted files were all the same format, but I guess he didn't look hard enough, because you get the raw files and a backup usually in a format called .ncf, unless it's an older source game (orangebox and below) or a gldsrc game, in which it uses .gcf and does not keep a copy of all the raw files.

Then why can't you use retail patches in some games in Steam?

Because, some patches are changing the *.exe files which are encrypted with Steam. So if patch can not find same sized exe file (like retail), patch failes to update. Because patch doesn't rewrite exe file.

Steam can discontinue your account and remove your games at anytime. It's in their Terms Of Service.
Well, lookie here, I was curious as to what kind of Terms Of Service one might have to agree to, to post a review for a game, and it's the whole GOG.com TOS, which includes
It appears to me, that it is just a standard clause for all Terms Of Service, and if watching Mythbusters has taught me anything, it taught me that 80% of all statistics are made up, and most "horror" stories of bad, bad, bad shit happening to people is a "myth."

I dunno, thats not what my mates cousin's drinking buddy's podiatrists daughter in law's son heard from someone he met on the internet

It's a standard clause for most digital distributor... but the big difference is that if GoG ever suspend you account you can still play to all the games you ever bought on it (and download of course). If Steam ever suspend your account you lose everything including retail games using Steamwork,

Last I checked you can backup your copies of games to play in offline mode with steam. :D

...which require on-line activation, yes

Have you done it, do they really?

Yep