Best of luck. I'm really sorry to hear about this, and I really hope you find another avenue for the game. That said...
I'm glad you seem to be taking it as well as you are, but I have to say, this is absolute unmitigated horse shit. This is the second time I've seen a dev who clearly has a story about adults get this kind of BS message from Steam, and I know damn well they have games on their site that are clearly intended to be high school stories, but they say "college," and Steam just goes along with it, or maybe their watchdogs missed those.
(Here are some hints Steam: colleges don't put students in "detention," their campuses have more than one single story building, they have lecture halls and often dorms, and they have deans not principles.)
Either way, I've hated Steam for a long time now. The game is called "Night Lessons," you refer to the location as "the Institute," and the teacher is a "professor." Ain't no high school I've EVER heard of that has professors, night classes, or the prestige of being called an "Institute" (they save that irony for pre-schools in wealthy neighborhoods with snooty parents.) Their moderators at Steam are just idiotic inconsistent assholes, they basically take developers money for doing the same job a google search used to do before they came along, and I don't give a shit about their stupid achievement system either. FUCK STEAM. Sorry, I just had to get that off my chest.
EDIT: BTW, just found one that actually SAYS it's a high school story right in the description on their site.
I understand your point, and I'll give you my personal opinion.
Steam provide a way to connect millions of people in a safe place for customers and devs, at least until I know. They started to sell hentai games since just a few years ago. Counting the different laws in the countries and different kind of people, steam tries to avoid problems because at the end of the day is a business and only that. I guess the time and energy to properly revise games like this (with a lot to read) would be hard, and they just have some kind of check lists to say yes or no.
Lana, for example, one of the characters I think was problematic. I said she is an adult (in fact I think in her in that way) but she has brackets, she goes to an arcade with pigtails and she is innocent at some points that is understandable some people could see her younger than she really is, and in that grey area, they choose to don't risk money and say no.
Before doubts, no. It sucks, but I totally understand them.
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Well, I'll try again with another project. I understand a lot of things in a better way now after make this game. I like the vibes of this, and I have plenty of assets to use in future projects.
Aside this, I really enjoy to work in this "ambient", "world", whatever you want to call, and I think some characters like Gloria, Muller, Powell, or a redesign of the main girls could work perfectly. Let's think what happens 5 years past from night Lessons, I think would be a nice story too.
This gives me a chance to try to practice with what I learned (think in the conditionals first, then people don't need to have problems with save files, a gallery unlockable at first steps, put events in the middle of the game to don't make it bored go here and there, use the minigames as a mechanic,etc...) and try to make a better game.
Also, I'll try to put the game somewhere to try to get some money from it, a lot of people tell me about itch.io, but I'm thinking more in DL site... I don't know, I need to read a little bit about it.