Yes - set it to 3.0 volts, the lower setting.
Actually all these numbers are very confusing since a 3 volt cell (as most Li-FePo4's are) is charged at 3.6 volts...
Here is a list of the nominal voltages, peak voltages, charge voltages, and discharge voltages for Li-ion's and Li-FePo4's. The nominal voltage is usually the working voltage or 'normal' voltage of the cell if you like. The peak cell voltage is supposed to be the on-charge voltage, ie what the charger puts out, though chargers can go a fraction higher.
Li-ion
[all types, all sizes, protected and unprotected]
[these are more correctly termed Li-Co cells since
all the cells we use are strictly speaking Li-ion cells as they all contain and are based on lithium]
nominal voltage - 3.7 volts (sometimes seen as 3.6v, this is the same)
peak voltage - 4.2 volts
max charge voltage - 4.25 volts
discharged voltage - 3.2 volts (the PCB protection will cut the battery out at 3.3 or 3.2 volts. In the case of an unprotected battery, it is damaging to let it go below this.
batteries should not be stored discharged as they will drop below this voltage)
Li-FePo4
nominal voltage - 3.2 volts (sometimes seen as 3.3v, this is the same)
peak voltage - 3.6 volts
max charge voltage - 3.65 volts
discharged voltage - 2.2 volts (it is damaging to let it go below this;
batteries should not be stored discharged as they will drop below this voltage)
A Li-FePo4 cell will be damaged by charging at the higher level a Li-ion needs. Damaging a cell increases the risk it will fail while in use. Use the lower setting on a 2-position charger. 2 x Li-FePo4's are a good choice for a '6 volt' mod, assuming they fit, as they will be safer than 2 x unprotected Li-ion RCR123-size cells. The C rating (discharge potential) is much higher and the chemistry is safer.
But note: it is reported that, contrary to some information, they can blow, most likely due to being overcharged on the high setting - we have 1 report of this occurring. It's true that 1 report is not conclusive, but there is potential for damage as most chargers will overcharge these cells, and even 2-position chargers have the potential to do so if a mistake is made.
It is very useful indeed to have a multimeter so that you can check the peak voltage of batteries as they come off the charger. This is an important safety point since if a charger goes faulty, it can overcharge the cell, and this is one cause of failure. It also tells you if you forgot to set the charge voltage correctly...
You can also check the discharged voltage as well, bearing in mind that if you take a battery below its recommended minimum you will damage it.
Owning a meter is a good safety measure and one we advise. If you own a mod you should have a meter, and learn how to make basic checks with it. Safety is something that depends on you, not others. The very first thing you will learn on any industrial safety course is that safety depends on YOU, not others - and YOU have other people's safety in your hands. This is the first principle of safe working and it can be applied to many things.
Get a meter.