As mentioned before. this setup.seq has issues depending on versions and file locations.
You can either spend / waste time debugging this in your situation (actually a pretty good practice for troubleshooting techniques described in Lesson 5)
or
just do the stuff the setup.seq is supposed to do: set the search directories as described in Exercise 3.2 (my mistake earloier on) and the report settings in Exercises 7.1-7.3
Setup.seq is meant to be a convenience tool