I would go further and question why anyone actually needs an offline install of Race On or GTR Evolution at all. I find it simply confuses issues in that you end up installing twice as much on your hard drive (not a problem with modern day storage capacities but very pointless IMHO) - It also causes problems should you want to install extra tracks or mods because you need to install them to both installs to be able to use the them online/offline. Note that if you start Steam while not connected to the internet you get a message asking of you want to Run Steam in OFFline mode so you can still play Offline, using your 'Online' Install anyway..
I think and its been a while since I did this, that the best procedure would be :
1- Download and install Steam from the Steam website.
2 - Create a Steam Account.
3 - Wait for the postman(or woman) to arrive with your discs.
4 - Make sure you are NOT logged into your Steam Account, before you start.
5 - Insert on of the DVD's (does not matter which as both come with Race 07 - the base game)
6 - Start to install from disc.
7 - As the install progresses you will be asked to install Steam, let it do this, even though it seems odd..
8 - It will then ask you if you want to create a Steam account or LOG into an Existing Account - choose EXISTING Account.
9 - The install will proceed and should say 'Installing from disc'.
10 - The install will then tell you that updates are being downloaded in the background - don't be surprised if you see quite a lot being downloaded here.
The main reason I say to do it in this order is that it is so easy to end up with Steam installing the entire game from a download - not a problem unless your on limited download - but much slower than installing from disc and then only updating the install.
I hope this is proves helpful, please let us know of any issues you have with the install (hopefully none), as I like to try and keep myself up to date with how the install procedure is working - avoids much headscratcing next time I install.
On a side note I am currently in the process (this morning) of attempting to install the Race Series on a Linux desktop using WINE (WINdowsEmulator) - I have little or no experience of Linux or WINE so by this afternoon I would recommend not walking past my house as you may encounter a low flying PC landing on your head as I throw it out the window...