[Peregrine]

As far as the stars go keep in mind that is the opinion of your team's scout, or the league's scout. If you have scouting on default levels there will be a lot of variability between what you see and what you may get. I would recommend turning scouting to 100% accurate until you get used to it. Also keep in mind that a good number of people who play the game don't like the star system at all and don't use it.

What I don't get is, other than stamina, what makes a pitcher a relief pitcher instead of a starting pitcher?

Generally it's the lack of a valid third pitch - most starters, in addition to high stamina need at least 3 good pitches - generally relievers have 2, or sometimes 1. A starter will face a given batter multiple times in a game and unless they have 3 pitches to mix up, a batter will generally "figure them out" - but in relief a pitcher won't usually be seeing a batter more than once. It doesn't mean that an amazing starter with only 2 pitches can't succeed, but just a rule of thumb.

Now for the big one... Setup? No idea at all. Any help?

The setup man is usually considered a team's second best (and third best if there are two) reliever - they will often pitch in the 8th inning when a team is winning to "set up" the game for the closer to finish things out in the 9th. They can be used in other situations too - like when you need some talent on the mound to get past the best hitters in the order.

While I'm here... Ground vs. Fly. I'm guessing that if you pitch a lot of ground-balls there's less chance of a HR but also less chance of catching batters out? And vice versa, flyballs tend to HR more but also get caught more?

Generally groundball pitchers are preferred because if the other team hits most of the balls on the ground it will limit their ability to hit not only home runs but also all kinds of extra-base hits. If you have a good defensive infield with a good GB pitcher this enhances the effect. Flyball pitchers (usually) are power pitchers who throw hard, get a lot of strikeouts but if they do get hit the hitters will make good contact - generally leads to more home runs and extra base hits but also more popups (I believe.)

Oh and one final thing... batting ability vs. fielding ability. How useful is a great fielder who can't bat that well?

To be honest the minor leagues are filled with players who can field well but can't hit. Generally hitting ability is what will determine if you can make a major league roster and stay there - that's not to say there's not some top notch fielders who are weak hitters around, but you usually have to have an additional skill (like speed) to make this work. As far as the different positions, usually first base is the position where a really bad fielder will hurt you the least, so often good hitters who can't play well at other positions due to age or whatever, get moved to first base successfully. Other infield positions you don't want to have really terrible defense, because it will allow a lot more hits to go through (because the player can't get there to make the play) in addition to straight errors.