Clarification from the official errata document:
If Steel Thought is used successfully, it only affects the character using the talent. Other targets of the effect do not benefit from Steel Thought (unless they have and successfully use it themselves). This talent cannot be used to negate any ongoing effects, unless a test against Mystic Defense is made.
House rule:
Steel Thought does not suffer the -3 penalty for being Defensive.
To fix this on your Roll20 character sheet, go to the Talents tab, find Steel Thought, and select 'Defensive' under Modifiers.