Programs tried to install on my nonexistent D drive

Did you change the default programs install location in registry?

It's not a Best Practice to install Programs anywhere but C since they write registry keys that integrate themselves into the OS until uninstalled. Your situation confirms this yet again.

Look these over which might be helpful as you try to undo the original change:

How do you change the default Installation Directory in Windows 7 - Microsoft Community

Microsoft does not support changing the location of the Program Files folder by modifying the ProgramFilesDir registry value

hmmm I never changed it to D, currently only steam has this issue of installing to D (I tried installing a few other programs and they are fine). It is probably because I forgot to remove steam from D before I deleted it.
I tried the links, but it doesn't seem to be those cases.
(I also contacted steam to see whether it is an error caused by steam rather than windows 7)

You can shrink C to create a partition D to install Steam on, then correctly uninstall Steam in Programs and Features, clean up registry leftovers using CCleaner afterwards. Then delete D partition, Extend C into the space, reinstall Steam.

If that fails I'd search in the registry for Steam and delete all keys to see if it clears it up.

Set a System Restore Point - Create .

Type regedit in Start Search box, rightclick result to Run as Admin.

On Edit dropdown menu, choose Find, type steam in search box. Click Find Next. Delete each value for Steam it finds.

After deleting a value, go back to the Edit tab to Find Next until it searches the entire registry.

Ok, so I created a partition D and somehow managed to install steam on to my C after D is being created. So i just simply installed it on C and removed D after installing and it works perfectly fine now.
Thanks for the help :)