That usually pops up when theres an error that can't be displayed properly because of steam intercepting it. If your in offline mode, or Steam gets disconnected from Steamworks it may also generate an error as well.

There are also restrictions when your playing from certain asian countries, but theres never been a clear answer from Steam about where its not allowed to run.

You can try installing the game separately from Steam using the link below. It won't work with the Steam login, but it can at least give us an idea of whats wrong.
http://download.threerings.net/spiral/client/spiral-install.exe