Is the unit weight for soil in Settle3D a dry or wet density?

The unit weight that is defined in Settle3D is the moist (unsaturated, degree of saturation<1) unit weight which will be for the material above the phreatic surface.  You can also define the saturated unit weight for the material below the phreatic surface in the same material property dialog.

You should not use the submerged unit weight below the water table.