I've definitely seen used PC games at yard sales and such. I don't buy many there, and I doubt many people would, aside from the usual yard-sale browsers who will buy anything that looks cool and is cheap.
Re-selling has less to do with your Steam library (which is really just a client for your local files, when it's using games you store locally--just groups them with the games you bought online, for convenience) and more to do with the copyright and EULA for the original game.
Given most EULAs, and given the games industry hates used games with the fire of a thousand suns, I'm gonna guess you're not legally allowed to re-sell on your own, not that it stops the yard-salers. You'd have to read the EULA to be sure. Note that a lot of games from that generation, bought physically, have install codes and other "digital rights management" (i.e. anti-copy) to prevent re-sale, to the bane of anyone whose hard-drive has ever died.
If you're looking to off-load the games, GameStop and their regional equivalents (I have no idea what they are in the UK, but many other chains follow their lead anyway) often accept trade-ins. Doubt they'll give you much for older games. (And they define "old" as older than six months, I've found. They're looking to make some extra coin on people rushing through a new release then reselling to people like me who'll buy 3-4 months down the line at a cheaper price.)
For this, the games industry also hates GameStop with the fire of a thousand suns, but are still semi-reliant on them for physical distribution and promotion and so have fewer avenues to crack down on GameStop re-sale. This is why Steam and other digital storefronts exist--it's not actually for your convenience, it's there because digital distribution costs less and because it functions as a sort of always-on DRM for the games bought on the service.