For climb... You set whatever you want without exceeding 765C (or your companies SOP limit. We use 740
or 101.6% Ng
Once upon a time this was true but at a point of time a "MAXIMUM ENGINE TORQUE FOR CLIMB" chart was introduced to the POH which appears to be overlooked by a lot of operators, check departments, instructors/trainers and C208 pilots themselves. Although this change happened many years ago what has unfortunately occurred is
"monkey see, monkey do" in regards to teaching flying of the van (i.e. "this was how I was taught so this is how I will teach it to others") and few have actually consulted the books or kept pace with procedure changes. It also hasn't been helped by the fact that other PT6 aircraft (e.g. Kingair) don't have a similar climb torque limit (not justifying pilots not keeping up with changes though).
I no longer have a current copy of the C208B handbook as I don't fly them any more so this page reference may be a little out of date, but the above mentioned chart is found in Section 5 Page 18 of the C208B G1000 POH of the no longer current copy I still have (not sure on the page number for the non-G1000 version but the same chart is in section 5 somewhere). The limitations section for the engine in the POH also directs you to this chart.
lilflyboy262...2,
As for giving you an answer as to why this limit exists I am sorry (and disappointed) that I cannot answer that for you because I don't know myself (and would like to know). My former company had a "PT6 expert" (from an engine overhaul firm) come give us a lesson on PT6 design and operation but when a colleague of my asked him about the climb torque limit and why had it been introduced he didn't know about it, couldn't give us an answer as to why it was there, said he would contact P & W to find out and we never heard back from him.