Steam distilled water is just water that has been evaporated and then collected from the steam. This kills many of the living impurities as well as removes most (if not all) the chemical ones.
I know that is gets tricky with chlorine, alcohols and other chemicals that would evaporate off BEFORE the water does. I belive this is why in the plants I've seen, the water was boiled for a while and the gases allowed to vent off, then the steam was collected and condensed back into water.
::shrugs:: I honestly have no clue if distilled water is bad for you though. I know that it's low in mineral content and will attract IONS of minerals, salts (perhaps toxins also dont know), and I have read that drinking only Distilled water could deprive you of needed minerals. Not really sure if that's true though, since if our body is in good working order and clean, minerals and nutrients can be reabsorbed if needed. I suppose it creates more work for the body though.
WHO KNEW! I've thought about the topic and thought I figured it out, but your questions made me realize I hadn't a clue. Thanks.