Are there any bonuses or drawbacks to buying the Steam version of this game? I could not find a physical copy anywhere.

Not really. The Steam version just comes with the latest patch, which allows the game to work in modern systems. The only plus is you can take screenshots via steam coz normal screenshots are all black screens.

Also, if you get this game, make sure to get the Arx Libertatis mod. It fixes some bugs and the few other mods you can find are based on Arx Libertatis.

Thanks. I wasn't even aware there were mods for this game. Awesome. Any tips for installing the mod?

Arx Libertatis? It's an installer so you only need to get it from here: http://wiki.arx-libertatis.org/Download
Choose between the 32 and 64 bit installer depending on your windows and install it like any other software.

To install other mods you will probably need to copy the folders inside the compressed file and paste them either in the Arx Fatalis directory or in the Arx Libertatis directory. The mods come with more detailed information about installing and uninstalling them.

This game doesn't really have an active modding community so there are really few mods out there. I have been making some more myself, though.

Thanks a lot. I can't wait to play this game!

No problem, lad. Game is old but still fun to play!