That's the evil of Steam. It will auto update your games if you don't specifically turn it off (though the update from 0.96 to 1.01 might have been forced as it was the release version). Double check to make sure you turned that setting off. And sorry for your loss.
Actually yeah, Steam tends to update games even when I tell it not to. Even when I take it offline.
You know what this means. Soon, the Steam logo is going to crumble away and reveal its true NYSE-registered corporate name: Datadyne. Before long the robots will rise, and we'll be forced into a world of flaming television sets, rubble from once-proud buildings, and Arnold Schwarzenegger attack squads.
...right. Well, if that's really what happened, I suppose I can at least assume that it was a one-time event.
Back when the original game launched, so many successive updates happened (and prevented loading old saves) that I stopped playing for a while. This was when I still had it on DVD (and distributed by Stardock's game market) and I'm pretty sure it wasn't even on Steam yet.
So while it's not a one time thing, I do believe they've since begun pacing the updates. I do know the pain, man.