At time of writing steam screenshots are not working for Distant Worlds 2 – The process in this guide describes how you can upload screenshots manually.
How to Manually Upload Steam Screenshots
1. Print screen using print screen button.
2. Save file in this format “20220310174027_1”, based on date format YMDHMS followed by “_1”
3. Move file to C:\Program Files (x86)\Steam\userdata\<some number>\<some other number>\remote\1531540\screenshots – Items in <> will vary by user I believe one maybe an individuals steam account id.
4. Create a a thumbnail 200px wide (height depends on aspect ratio) and save here: C:\Program Files (x86)\Steam\userdata\<some number>\<some other number>\remote\1531540\screenshots\thumbnails
5. Fully exit steam (not just close window), relaunch and screenshots will appear in screenshot updater as normal.