For Inheritance Tax purposes a child includes a stepchild. I presume the same would apply to the Succession Act on intestacy rules, but am not sure about that.
A will made when someone is not compos mentis is invalid AFAIK
Re the State knowing about an estate with no relatives, often a friend or neighbour will do it. The Succession Act has a clause in it where the Minister can appropriate some of the estate to someone who looked after the deceased.
A step child in residence would be ok if they are entitled under intestacy to be there.
A step child (or anyone else) who takes up residence after the death of the owner would be taking a chance really, unless they are entitled to do so under the rules of intestacy.
I am no expert in the law, but have an interest. I am happy for someone with more knowledge than myself to point out inaccuracies in what I have said.
A little knowledge can be a dangerous thing!!
At the end of the day, proper legal advice is the only route to go. And I think you know that too.