Using wp_login vs login_redirect to redirect based on user-meta

Are you sure $user->user_profile_setup is the correct way to reference the meta info?

# does 'user_profile_setup' show up under wp_get_current_user()?
print_r(wp_get_current_user());

I think you mean to do:

function first_time_login( $redirect_to, $user){
  if( get_user_meta($user->ID, 'user_profile_setup', true) == 'true' ){ //edited line
    return $redirect_to;
  }
  else{
    return "/account-setup?redirect_to='". $redirect_to . "'";
  }
}

Assuming that

$current_user = wp_get_current_user();
print_r(get_user_meta($current_user->ID));

Outputs

Array
(
  ...
  [user_profile_setup] => Array
    (
      [0] => true
    )
  ...
)