So I had just finished my first game with my group using the starting game setup in the Learn to Play group, it was a blast. However, the starting game specified which planets the factions held and what units were on them.

I found the advanced setup rules that stated how to setup planets and units for regular games (Draw top three probe cards for rebels, 5 cards for empire etc.)

However, in the rules it never specified if we have to draw from a specific set of planets for "realism." I've noticed a few probe cards have a faction icon on them, while the majority of the rest simply have a circle.

Rebel Probe Droid Cards are: Naboo, Kashyyyk, Ryloth, Bothawui, and Mon Calamari.

Imperial Probe Droid Cards are: Sullust, Mustafar, Corellia, Saleucami, Mygeeto, Rodia, and Mandalore.

Does anyone know if we have to pick our starting planets from these sets or does it include populous neutral planets?

The probe cards have icons on them, imperial or rebel. You keep drawing until you get 3 rebel and 5 imperial cards, and use those for the starting planets. Probe cards with neither icon are ignored and another card is drawn instead.

We immediately played a second game based on the advanced rules setup. We took the entire probe deck, shuffled, and drew cards until we pulled 3 Rebel faction cards and 5 Empire Faction Cards. The rules say (off the top of my head) that the first 2 Empire cards drawn are the Subjugated systems and the other 3 are Loyal to the Empire.

Once you have these 8 cards you reshuffle the probe deck minus only the 5 Empire Faction cards you drew. This is the Probe deck for the Rebels to pick their base from.

So YES, you starting 8 planets will only be planets with the Faction Icons.

You're almost right on the adv setup rules. See 8.I (the last page) of the Rules Reference

Shuffle the probe deck and reveal cards from the top

of the deck until three Rebel systems and five Imperial
systems have been revealed. Place a Rebel loyalty marker
in each of the three Rebel systems. Place a subjugation
marker in each of the first two Imperial systems drawn
and an Imperial loyalty marker in each of the other three
Imperial systems drawn.
Return the five probe cards showing the starting Imperial
system to the game box. Then shuffle all other probe
cards back into the probe deck

So you don't draw the top 3 for rebels then the next 5 for imperial. You draw until you have 3 with the rebel icon and 5 with the imperial icon. Then you use the first 3 rebel cards, then the first 5 imperial. Since there are only 5 planets with rebel icons, you'll start the game with 3 of the 5.

Thank you

You're almost right on the adv setup rules. See 8.I (the last page) of the Rules Reference

Shuffle the probe deck and reveal cards from the top

of the deck until three Rebel systems and five Imperial
systems have been revealed. Place a Rebel loyalty marker
in each of the three Rebel systems. Place a subjugation
marker in each of the first two Imperial systems drawn
and an Imperial loyalty marker in each of the other three
Imperial systems drawn.
Return the five probe cards showing the starting Imperial
system to the game box. Then shuffle all other probe
cards back into the probe deck

So you don't draw the top 3 for rebels then the next 5 for imperial. You draw until you have 3 with the rebel icon and 5 with the imperial icon. Then you use the first 3 rebel cards, then the first 5 imperial. Since there are only 5 planets with rebel icons, you'll start the game with 3 of the 5.

I saw the part, however the wording through me off. In the book it only states that Rebel Systems are defined by the rebel Token, likewise for Imperial Systems