If you're hoping for a decent acoustic tone out of the guitar, you need heavy enough strings to drive the top. Archtops can typically handle pretty heavy strings, as that is what they were designed for. At a minimum I would opt for a standard light set (.012-.053), but you would probably get better tone from mediums (.013-.056). With a proper setup, these will play well, and the tone difference will be dramatic. Stringing an archtop with .010's is a waste of a good guitar.

It's not necessary to stick with flatwounds -- they can provide a nice rhythm "chunk," if that's what you're after, but for the most part you'll find the tone more pleasing with roundwounds, especially for single-note lines. Or you can split the difference with half-rounds (roundwounds that are ground flat after the windings are on the string).

As far as a "proper setup" goes, you may need a neck reset -- not something that a novice can do, but any competent luthier should be able to handle it for you. If it needs it, bite the bullet and get it done; you'll be glad you did.