What Avast version (latest version being 17.4.2294) are you using ?
I'm checking this on my win10 Home 64bit laptop as my win7 SP1 netbook is using an earlier avast version.
Are there any specific files or sub-folders within the setup folder that are very large ?
Most of the files in my setup folder are .vpx files and these are used for for validation against corruption, these would be protected files.
I'm not sure what you mean by 'blue folder' setup, my C:\Program Files\AVAST Software\Avast\setup folder is 343MB size on disk. In explorer some folders my be coloured blue if you have compressed them, but I think avast would protect against such interference in avast folders.
The total size on disk for the whole of my C:\Program Files\AVAST Software folder is just under 1GB and that includes the defs sub-folder that has multiple virus definitions sub-folders and these should be periodically cleared by avast housekeeping.