So. . . purchased LotS on Steam, Steam downloads 150mb update for AI War.
Launch AI War and it still shows 4.021 or whatever the old version was.
Download the official update from inside AI War, install and restart.
Launch AI War and register new LotS key (works fine).
Don't know what the hell Steam download the first time around, but it works now at least!
Will be pestering friends to get into this now