Can I use the Nikon 60mm f/2.8D AF Micro-Nikkor Macro Lens with Nikon D80 body?

As stated, is the lens and camera compatible? Any special setting need to accompany it?

It will fit and work 100% with the Nikon D80

Of course you can. There are very few F mount lenses that won't work with the D80, and the ones that cause problems are old manual lenses.

Yes it will work.

However, I prefer a slightly longer lens for macro, even on a DX camera. A longer lens will allow you to stay a bit further back from the subject. This can be important for photographing bugs as you can scare them off if you are too close.

I looked at the 60mm lens when I bought my macro; I ended up with a Tokina 100mm f/2.8 macro. It's around the same price as the Nikon, but I think it is a bit nicer.

http://www.althephoto.com/lenses/100mmprime.php