I had the same problem when I first tried to play Valheim, and what worked for me is turning off the Steam Overlay for it.

Right-click on Valheim in your library, Select Properties and un-check "Enable the Steam Overlay while in-game".
Restart Steam completely and try re-launching the game.

Also try playing it in Windowed mode, or if you already had it set to Windowed, try setting it to Full Screen. I've found some games are a bit goofy when it comes to working properly in either setting.

Hope that helps! If not I'm sure someone else will have great suggestions for you to try soon :)