Playing with 2 heroes in first quest of Kindred Fire, when the boss at the end is revealed, it said to place "1 Elemental". It didn't say "Master". I have seen others say at times the game asks them to place a Master as a unique.

If it doesn't explicitly say "Master", I assume we should use a "Minion" for the unique?

Unique monsters don't have to be masters, it depends on the number of heroes and monsters and the specific text. If it just says '1 Elemental' Then it will be a minion for 2 heroes and a master for 3/4.

I think the idea if not specified is to follow group limit numbers but also its been said the colour of the monster portrait surround indicates red or tan

no you follow the normal group limits on the back of the monster card unless the quest explicitly states to place a master or to ignore group limits.