I apparently got a little confused in set up. When you choose your monster groups, you set them up according to the Group Limit for the number of players, correct? For example, the Ettin in a 3 player group would be just one Master Ettin, or did I get that wrong? 

And when gaining reinforcements at the end of the OL's turn, can one of those monsters be a Master as long as it abides the Group Limit?

 Yes and Yes.

I am still confused about what exactly the setup part means when it says:

"Goblin archers, 1 open group"

then it says "place the Goblin archers on the exit. Place the open group on the grasslands"

Does this mean I am placing two groups of Goblin archers, one at the exit and one on the grasslands?

I understand how to determine how many goblin archers makes up a group based on how many heroes, that part I get.

but I cant find anything in the rules or quest guide that explains exactly what I am supposed to do, can anyone clarify this for me?

 Open group is any monster that has a matching icon for that quest. The number is determined by the number of heroes.

 Freebird, the sole purpose for the icons at the top of the quest pages is to limit which monsters you can play as an "Open Group". Prior to setup pull out all your monster cards that have at least one of those trait icons. Choose any of these to be your "Open Group". It's your choice (within the limits of the trait icons) which group to play. See page 16 "Monster Card Anatomy" in the rule book.

Totally get it now. Thanks guys.