Ok found a solution. You don't need to re-install ffxi! I got the steam version on new years and had been playing the trial account version. I was not able to update playonline and noticed it was a different version than the one i had been using with the trial account.

Use either a hard copy of the game or the installer from the trial version zip (downloadable here http://www.finalfantasyxi.com/freetrial/) to re-install playonline and tetra master.

Run the installer for playonline and tetra master it should uninstall the previous version. Go to {Program files (x86)- Stream- steamapps- common- ffxi- SquareEnix} and make sure the playonline folder and tetra master folder are deleted ( delete them if need be). Re-run the installer and have it install into the {...common-ffxi} folder. For me it automatically put the new install of playonline and tetra master right next to FINAL FANTASY XI in the SquareEnix folder. (it keeps your install of the game ffxi intact)

Then i booted the game through steam and it acted like it was the first time i had booted it up (asked if i was a playonline member ect). Playonline updated then once i had logged in and gotten to the game the game updated just fine (took 50 mins)

Hope this helps!