Is the setup phase considered a part of the first round where Limited is concerned? That is, if I play one limited card during setup, am I allowed to play a limited card during my first Marshalling Phase? If the setup phase is considered a part of the first round, then I'd say no....but if the setup phase is separate from the first round, then this would be a legal play. Just looking for clarification.

The Setup phase is not part of the first round. It's literally considered Setup for the start of the game.

Therefore, you may place 1 Limited card in Setup AND marshal or play 1 Limited card in the first round.