Set up = Adjusting the truss rod, intonation, pickup height, filing saddle slots, etc. Basically ensuring that your guitar is in tip top working condition.
On the Epi Special II: AVOID AT ALL COSTS
I owned one back in 2002, and got rid of it almost immediately. Bad setup, horrible intonation, overly thick finish, scratchy electronics, finish that started chipping off, tuners that slipped.
If you have a budget of $400, consider getting a set-neck Hamer SATF from City Music (I'm assuming they will have a sale soon). Much better construction for the money.