If my friend lets me play his copy of The Witcher 3 via Steam family sharing, is he still able to play Dota 2 while I play The Witcher? If not, am I able to go into offline mode to play The Witcher while he plays? I'm pretty sure Steam does not want you doing this but do they ban people for it or anything like that?
When you share, what you are sharing is your library. You can play any game the owner has, but you can't do it while he is playing any other game. No matter the video game, while he is playing something, you cannot play anything from his library.
I have my library shared with my girlfriend and these are some of the checks we did:
- It does not matter if the other person is offline - you can play the shared games as long as you have an internet connection;
- You can only play if your friend's library is free. This means that neither the owner or anyone else is using that library at that time;
- If someone else has shared the library and starts playing before you, you'll have to wait until that person stops playing;
- Even if you or someone else is playing, if the owner of the library starts playing, he will "eject" you from the shared game after 5 minutes;
- You can not play any offline game that is not yours, because Steam verifies whether or not you have access to the game, offline or not;
- All the DLC are also shared (unless the person borrowing only owns the base game).
No, you cannot play from your friend's library while they are playing. If they go offline, their library isn't available to you and if they are online and playing, you are blocked.
However, if your friend is willing to do so, you can log in to their account from your computer and play at the same time, assuming at least one of you is in offline mode.
However, this will sync achievements and saves with their account and from time to time you could be signed out.
tl,dr: there is no way for you to access your friend's shared library while he is playing Dota2
An online Steam library can only be in use by any 1 person at a time (in use = any game inside that library is running).
You cannot access someone else's shared libraries while in offline mode yourself.
However, if the owner of the library boots Steam in offline mode, the Steam servers have no way of knowing that he is in fact playing and hence, the owner and 1 other person (so 2 in total) can use his library (note that this is useless in your case since Dota2 is an online game so offline mode is not an option).
Only thing I have not tested since the friendlist overhaul is, whether logging off the friend system is enough to count as offline, or if you still have to completely boot Steam in offline mode (which I suppose).
Apparantly the owner can no longer switch to offline mode in order to share his library while playing, see the comments by Joachim for more details.