How to fix this in Arch?

And trying to install the catalyst AUR packages does not work either as they don't support xorg-server 1.17.1

it looks like you dont have your 3d drivers installed, look at the table and you want the open source ones, as explained on the arch wiki
sudo pacman -S xf86-video-ati
sudo pacman -S lib32-mesa-libgl
remember you will need all your multilib packages if you are on a 32 bit system, as steam is 32 bit

the amd drivers requiring an older xorg server is a common problem on arch, due to how long it takes amd to update their drivers, but on the arch wiki there are instructions on how to backdate your xserver so it will work, i had to do it on my old pc its rather annoying but for games the performance is eons better than the open source one so for your steam games itl be heaps better
i would definitely think taking the time to get the propriety drivers to work is worth it

in the end to test if you install the mesa-demos package and run
glxinfo | grep render
it should return the amd string if you use the amd driver or the mesa string if u use the open source driver and can be used to test if your drivers are installed properly
now i can guess you will have a direct rendering error on your first startup steam, its a common arch problem, its just the arch libs are newer than the steam ones simple fix at the bottom of
good luck!