If you remove the chimney then the boiler would use a power vent to exhaust the combustion gases out through an opening on the side of the house. You would first have to determine if the current boiler could be retrofitted with a power vent, or if you need to replace the boiler. The distance the boiler is from the exterior wall may be an issue. Also you would have to follow the local code for side exhaust venting. All of this is possible but it can become expensive.

Your question is removing a chimney by the details you give are very limited so an answer isn't possible, it's like asking what is ? + 2 = fish so more details are needed.

When you say steam system I'm assuming you have a steam boiler. What fuel is used by the boiler? If it's natural gas the answer you seek is NO, unless it's a high efficiencycondensing boiler. If the boiler is condensing the unit should be vented out a PVC pipe, and if so technically you could remove the chimney, IF the chimney isn't used to vent a gas hot water heater.

Have the boiler and hot water heater looked at by someone who knows the difference and if the chimney is being used, and if so and you still want to remove it you'll need to also replace the heating equipment with new modern high efficiency models that wouldn't need the chimney, and that vital square footage you want to reclaim will cost about $5k to $10K each.