Bought a used iPhone and it has Activation Lock. How to set it up?

Unfortunately, it sounds like you've encountered Activation Lock an anti-theft mechanism set by a prior owner of the phone.

Until THAT owner releases the lock, the phone will remain unusable.

See how to release the lock in this article:

How to remove Activation Lock - Apple Support

Activation Lock is intended as a theft deterrent.

It’s not easy to bypass.

Return the phone to the seller for a refund, or for the seller to clear this lock.

What the seller needs to do: What to do before you sell, give away, or trade in your iPhone, iPad, or iPod touch - Apple Support

If this is the usual scam, the seller is now gone, and you now have a non-working and non-useful iPhone.

We can’t help clear this lock, and Apple won’t.

If the seller is unable, unwilling, or gone, recycle this.

The All Too Common SAD Reality of Buying a used iPad/iPhone - Apple Community