The rules state "using a software simulation of the robot to verify motions is not permitted." Can we press keys to tell the robot to execute inputs during Setup Time? Ex: Pressing the up arrow would tell the robot to move up 1 grid square.

No. Teams are required to modify their impounded program to control the motions of the robot. As the impounded program source code file(s) are not being modified, this has been defined as configuring the robot and not programming. To program the robot as required by the rules, the impounded program source code file(s) must be modified to instruct the robot how to move.