I aint got a clue what to set it at, best to record an MP3 to a tape and then play back and see what sounds best.
As I say, it shouldnt make any difference on recording, only on playback (although I may be wrong), so its something that can be adjusted at any time.
With regards to NR it depends what you want to be honest. Dolby B is -10dB, so its less intrusive then C, which is -20dB. Dolby B has become quite acceptable and is used by some FM radio stations and although C can generally do a better job at cleaning up a recording, it usually leaves the resulting audio quite low frequency/bassey.
Best to play about with it and see which suits you best, its the only way. If the recorder can record in NR, id say go for B if any, as C is a bit extreme, especially for headfone use.
Of course, if you can record in C and playback in B its quite acceptable, but other then this I would never say use C for recording.