So I cannot start any of the hearthfire content apparently. He makes no mention of the orphanage what so ever either. Stewards have no dialog options about buying land. Deleted an redownloaded Hearthfire, restarted game, restarted console. Nothing has worked so far :/

try to steal it off the courier when you first reinsall it as he appears (if he will not talk to you). Just guessing.

He talks to me and says he gives me the letter, but it never appears in my inventory. I tried killing the fellow but apparently he is 'essential'. Dont know about pickpocketing yet.

Do you have a bounty?

Tried pickpocketing the courier, all he had was clothes. Had a small 25g bounty in the reach, went and paid that off. So we'll see what happens.

Went to Morthal, apparently the Steward has the option to buy land there, not in Falkreath though.

You can't buy land in Falkreath until you have done a certain radiant quest for the Jarl.

Hmm, well maybe it will pop up eventually.