I have no first hand experience with Titan Quest but I don't think customers would accept these versions not working with each other (and you would certainly have seen a lot of topics covering it on the web.
So it's a pretty safe bet to say that you will be able to play together.
Just go ahead and get the game through steam. If you can't play together then get help from the publisher. At least, that is what I would do. The most likely reason why you can't find anything on the net is because there is no issue. If you really want to play it safe, email the developer first.
It's possible that you can play together but if he has the retail version then he can probably activate it on steam to make it easier to play co-op etc.
I can't imagine you wouldn't be able to play co-op. Everything else multiplayer works as far as I know.
What would happen if CS:S players who bought the game on steam couldn't play against gamers who bought a boxed copy? I know it's not exactly the same but it's close.
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