Setup / Set-up can be used as an adjective in two ways, so the OP is a bit confusing.
Setup bait, setup fodder, a setup Gyarados (as in a Gyarados that has Dragon Dance but may or may not have already used the move) are all correct.
However, set-up applies to Pokemon that have already set up. So, a Gyarados at +1 because it used Dragon Dance is a set-up Gyarados, but one that has Dragon Dance in its moveset is a setup Gyarados, because it can set up (if that makes sense at all x.x)
Also, ignoring Baton Pass, a set-up DD Gyara is always a setup DD Gyara, but a setup DD Gyara is not always a set-up DD Gyara, kinda like rectangles and squares (I hope that helped to clarify more, instead of being more confusing ;-;)