Steeling with a smooth steel does straighten out the edge. A smooth steel will not remove any metal -- that is, it will not sharpen or polish the edge at all. A grooved steel can remove some metal.
Stropping isn't going to be effective is straightening noticeable waves or dings in an edge. What stropping does do is actually remove metal. Normally you charge the strop with a cutting compound, and this does actually bring the edge to a fine finish. If your edge has a burr on it, the strop can flop the burr back and forth until it breaks off. Some people finish off their burr like this, but I prefer to double-grind a burr off.
So, the way I use strops and steels:
A strop is part of the sharpening process; it is my finest level of finish.
A steel is used between knife uses. That is, I use the knife, and then the edge might be out of line, so I steel it to bring it back in line.
If the steel doesn't seem to be bringing the edge back, you probably need to remove some metal (i.e., to sharpen). If your edge isn't too far gone, you might be able to strop it, and that could sharpen the edge right back up again. If that doesn't work, it's back to the benchstones to sharpen, then strop.
Strops sharpen, steels straighten.
Joe