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Stolen items can't be used for upgrades. If it says 'steal item' when you aim at it, it's only good for selling to dodgy bartenders at Anarchy-owned stations.
BTW, an anarchy system can still have many non-anarchy settlements. Every location has a faction owner, and only locations controlled by the anarchy faction are actually anarchy. To be sure it's an anarchy settlement, click the anarchy in the factions list on the system map, then scroll down to view their settlements (if any)
If I can't get materials by stealing, then how do I get materials at all besides missions?
Power restore missions/abandoned settlements.
E.g. 'eliminate scavengers at ...'
When you get there, eliminate the scavs then break in and loot the place. Same for power restores.
If you don't want to bother with the engineering, you can take a look at the pre-upgraded sharing is caring thread on the official forums where people post pre-upgraded stuff.
Its not really necessary to upgrade though to complete missions or win CZs, if anything it makes it all just way too easy.
The only area where i'd say some upgrading/engineering is worthwhile is getting a loadout for doing stealth missions. Can make doing those less of a headache.