Can topical corticosteroids be used while on the Obagi Nu-Derm system? If so, at what step should it be applied?

Yes. The idea is that HC should be used sparingly if at all. Decreasing the frequency of the retin-a portion and/or the hydroquinone portion is best & restarting more slowly. For fastest results there is a lot of redness and peeling (it looked like a blizzard under my chair) but slowing the process to make it more tolerable is the solution. Using HC too much defeats the purpose.
You really should. only use corticosteroids when prescribed by doctor (who would tell you if you can use both at same time). If you are using OTC steroids I would see doctor.