There is no single correct way to set up a sub. It depends on your equipment, room ect. Some choose to run their speakers full range with a sub. I personally cross my digms at 50 Hz, but they are easily capable of playing lower. If your AVR has a fixed crossover, generally you will want your sub crossover set at the max frequency (so you don't have both the sub and AVR filtering the signal). As for the volume on the back of the sub, you may need to experiment a little. Currently I have my sub set very low. I recently replaced a couple of HT subs, but when I was using them they were both set around the mid level on the back of the sub. Read
this article. It should give you a good place to start.