“set_front” => false on custom post type breaks wp_list_categories links [closed]

The parameter you are using is wrong. There is no set_front parameter when you register a Custom Post Type. The appropriate parameter is with_front.

‘with_front’ => bool Should the permastruct be prepended with the
front base. (example: if your permalink structure is /blog/, then your
links will be: false->/news/, true->/blog/news/). Defaults to true

http://codex.wordpress.org/Function_Reference/register_post_type#Arguments