Version 1.05 hasn't been released yet. When it is, Basilisk Games will forward the new version to Steam. It is then the responsibility of Steam to update their files.
The below is a .txt file that appears inside the root installation folder of Eschalon: Book II with version 1.04 of the game. I don't use Steam so I don't know how the game is installed on your computer.
Notes for Version 1.04
ADDITIONAL LANGUAGE SUPPORT
As of version 1.04 and higher, you will be able to add new langauages to the game via "language packs", available for download from http://www.basiliskgames.com
To change the game language, you must follow these steps:
1) Download the desired language pack from http://basiliskgames.com/downloads
2) Open the .zip file and copy the language folder into the root installation folder for Eschalon: Book II. Do not change the name of the language folder.
3) Using a text editor, open the file "general.cfg" located inside the root installation folder. Find the line that says "language=english" and change the word english to whatever the language is you just added. The language needs to be the same name as the folder you just added, so if you added a folder called "french", the line should read "language=french".
4) Save the file, and start the game.