You mean "Host may be running an updated or modified game"? If so, I think that means that you don't have the mod or skins which are used on the server.
We had the same problem before even though the downloads were in place. you can always use your online code and unlock the steam version with it . this has solved this problem a couple of times now..
if you are new to glt the club race we used last night was using modded content and this needed to be downloaded. look at the top of the club race post you will see thisServer name: RACEDEPARTMENT.COM GTL Class: GTC76 Alfa Romeo GTA Junior gr2 ( Download ) +sounds ( Download ) Track: Dijon short & Dijon Gp Default tracks
simply put your mouse over the blue download and click.. Make sure you game version is at 1.1
And the disc version.... again the same problem..
maybe better to use your online code and get a free version from steam..
We had 16 people in the server... so it was ok and that was with the steam version and the digital download..
very few still use the disc version..
it to much of a payne with windows 7..