Was it moral for settlers to move in and set up farms and towns? Why/why not?

Yes. But only on the land that wasn't pre-occupied by the native.

Explanation:

The vast majority of the land in North America at the time was inhabited. Coming to this territory to form farms and towns would not bother any particularly group of people.

The creation for farms and towns itself wasn't immoral.

But, doing so while taking the ancestral land of the locals and forced them to moved away or kill them is considered as 'immoral'. There were plenty of space that hey can occupied without doing so.

the answer is a. 250 percent.