You're interpreting "we can only believe the truth" as "it is impossible for us to believe anything but the truth", while the relevant sense is clearly "it is possible for us to hold true beliefs without any false beliefs." Huemer does infer the former is true if determinism is true in step 5, but he needs the third premise for that (If determinism is true, then if S can do A, S does A.)

Also, the conclusion isn't necessarily self-defeating, it just seems implausible.