There are no specific settings, it's complete personal preference. You can measure the height of your strings in mm but then that depends on how much neck bow you have and also the gauge of your strings.
Just go on feel and what you like best.
Btw a dead fret is a fret which is stopping the string vibrating because of a problem with the actual fret. I think what you mean is the string's fretting out, and yep that's when the action's too low.