I finally figured out how to Dark Step in this game. It isn't much different then in NMH1, but the major difference is that you Control Stick has to be set in the neutral position before you can dark step.
If you are like me, in NMH1, you would just block the attack and quickly wiggle the Control stick from left to right as you are blocking and you would eventually Dark Step. In this game, you must stand still blocking and right before they attack, you must press move the control stick either left or right. If you continue to press left or right, you will not dark step, you need to set the control stick in neutral position and try again.
In other words, to dark step, you need to be very precise, you need to have real good timing.
Started up a New Game+ and yeah, I can Dark Step enemies no problem. But just to further define how to do it easily:
Block and keep the analog stick in the neutral position. Right when the enemy hits you while you are blocking, quickly press left or right on the analog stick. Enemies will have a '?' around their heads and everything will slow down for a second, but that is it.
Dark step has been totally nerfed, making it almost useless.
It was way overpowered in NMH1, but i think they dumbed it down a little too much, if they had made it a little easier to activate then it is now and kept the reduced distance and speed it would've been better