How does the setting influence the mood of the story 'The Cask of Amontillado'?

You are right in identifying that Poe uses the setting in
part to create the mood. The mood in this story is one that is sinister, threatening and
disturbing as we move ever further down into the catacombs of Montresor's family home
and we move ever closer to the grim revenge that he has planned against Fortunato. It is
important to focus on how the description of the setting is used to create and sustain
this mood. Consider the following quote:

readability="12">

We continued our route in search of the
amontillado. We passed through a range of low arches, descended, passed on, and,
descending again, arrived at a deep crypt in which the foulness of the air causes our
flambeaux rather to glow than
flame.

Note the repetition of
the word "descended" - we are walking ever further deeper into the dark catacombs, so
much so that we are disorientated and we have no idea of where we are. What is clear is
that we have arrived at a crypt, where dead people are buried, and that the air is so
foul that even the torches are subdued. Clearly Poe is trying to set the mood for the
shocking events that are about to unfold.

I think another
key passage that helps create the mood of horror is when Montresor finally shackles
Fortunato into the alcove from which he will never
leave:

In an
instant he had reached the extremity of the niche, and finding his progress arrested by
the rock, stood stupidly bewildered. A moment more and I had fettered him to the
granite. In its surface were two iron staples, distant from each other about two feet
horizontally. From one of these depended a short chain, from the other a padlock.
Throwing the links about his waist, it was but the work of a few seconds to secure it.
He was too much astounded to
resist.

What strikes me about
this passage is the way that Montresor is able to describe the chains and their location
with cool, calm, precision, even while he is planning a most heinous crime and a
terrible death. The tone he takes adds to the mood of horror that dominates this
excellent but terrifying work of short fiction where the setting is essential to the
overall effect.