sudo dpkg --add-architecture i386
sudo apt update

Closing this as it's not a bug

I should have mentioned about the 32 bit architecture as well, really sorry about that. I did add it via

sudo dpkg --add-architecture i386
sudo apt update

before. And this issue has been occurring on two of my systems with completely different specs.

$ dpkg --print-foreign-architectures                
i386

┌──(exploit_ar㉿ARs-Kali)-[~]
└─$ sudo dpkg --add-architecture i386          
[sudo] password for exploit_ar: 

┌──(exploit_ar㉿ARs-Kali)-[~]
└─$ sudo apt update && sudo apt dist-upgrade -y
Hit:1 http://http.kali.org/kali kali-rolling InRelease                                                                                        
Hit:2 https://debrepo.freedownloadmanager.org jammy InRelease                                                                   
Hit:3 https://packages.microsoft.com/repos/code stable InRelease
All packages are up to date.    
Summary:                        
  Upgrading: 0, Installing: 0, Removing: 0, Not Upgrading: 0

┌──(exploit_ar㉿ARs-Kali)-[~]
└─$ sudo apt install -y steam                  
Solving dependencies... Error!  
Some packages could not be installed. This may mean that you have
requested an impossible situation or if you are using the unstable
distribution that some required packages have not yet been created
or been moved out of Incoming.
The following information may help to resolve the situation:

Unsatisfied dependencies:
 steam:i386 : Depends: steam-installer:i386 (= 1:1.0.0.85~ds-2)
Error: Unable to satisfy dependencies. Reached two conflicting assignments:
   1. libgbm1:i386 is selected for install because:
      1. steam:i386=1:1.0.0.85~ds-2 is selected for install
      2. steam:i386 Depends steam-installer:i386 (= 1:1.0.0.85~ds-2)
      3. steam-installer:amd64 Depends steam-libs-i386 (= 1:1.0.0.85~ds-2)
      4. steam-libs-i386:i386 Depends steam-libs:i386 (= 1:1.0.0.85~ds-2)
      5. steam-libs:i386 Depends libgl1-mesa-dri:i386
      6. libgl1-mesa-dri:i386 Depends libgbm1:i386 (= 26.1.2-1)
   2. libgbm1:i386 Depends mesa-libgallium:i386 (= 26.1.2-1)
      but none of the choices are installable:
      - mesa-libgallium:i386 Depends libllvm21:i386 (>= 1:21.1.0)
        but none of the choices are installable:
        - libllvm21:i386 is not selected for install because:
          1. kali-desktop-xfce:amd64 is selected for install
          2. kali-desktop-xfce:amd64 Depends qterminal
          3. qterminal:amd64 Depends libqt6gui6 (>= 6.2.0)
          4. libqt6gui6:amd64 Depends libegl1
          5. libegl1:amd64 Depends libegl-mesa0
          6. libegl-mesa0:amd64 Depends mesa-libgallium (= 26.1.2-1)
          7. mesa-libgallium:amd64 Depends libllvm21 (>= 1:21.1.0)
          8. libllvm21:amd64 is available in version 1:21.1.8-7+b1
          9. libllvm21:i386 Breaks libllvm21 (!= 1:21.1.8-7+b3)

┌──(exploit_ar㉿ARs-Kali)-[~]
└─$ apt-cache policy libllvm21 libllvm21:i386                                                                   
libllvm21:
  Installed: 1:21.1.8-7+b1
  Candidate: 1:21.1.8-7+b1
  Version table:
 *** 1:21.1.8-7+b1 500
        500 http://http.kali.org/kali kali-rolling/main amd64 Packages
        100 /var/lib/dpkg/status
libllvm21:i386:
  Installed: (none)
  Candidate: 1:21.1.8-7+b3
  Version table:
     1:21.1.8-7+b3 500
        500 http://http.kali.org/kali kali-rolling/main i386 Packages

Then this should be reported to Debian, as we take this package directly from their repositories and this is not related to Kali.

I recommend downloading and installing the .deb file from the official steam page. That does seem to work. Or you can use the flatpak package https://www.kali.org/docs/tools/flatpak/

The .deb package from the official steam page also does the same thing after the install (after it opens the xterminal to install the packages). I'll report this to Debian right away, thank you for your support.

Here's what debian told me

You'll have to report this to Kali.  Although some of the individual
packages may be from Debian, the problem here is due to the particular
way they're currently combined in the Kali archive.

> └─$ apt-cache policy libllvm21 libllvm21:i386
> libllvm21:
>   Installed: 1:21.1.8-7+b1
>   Candidate: 1:21.1.8-7+b1
>   Version table:
>  *** 1:21.1.8-7+b1 500
>         500 [4]http://http.kali.org/kali kali-rolling/main amd64 Packages
>         100 /var/lib/dpkg/status
> libllvm21:i386:
>   Installed: (none)
>   Candidate: 1:21.1.8-7+b3
>   Version table:
>      1:21.1.8-7+b3 500
>         500 [5]http://http.kali.org/kali kali-rolling/main i386 Packages
>

In particular, in order to install two packages of the same name on two
different architectures at the same time, they must have exactly
identical versions.  1:21.1.8-7+b1 is not equal to 1:21.1.8-7+b3.  The
Kali archive maintainers need to do rebuilds as necessary to make sure
that these are in sync.

Not a fix but why some one would want to install gaming software on a Pentest Distro at all?

You really shouldn't use Kali as your main Desktop/Gaming Platform... :-)