This is a tough answer because the rules are constantly changing and it depends whether you are playing indoor or beach. The simple answer is if there is excessive rotation on the ball, you contact the ball with both hands at different times, or hold onto the ball too long while setting, it will be called as an illegal hit. However, what is deemed as "excessive spin" is usually up the particular referee calling your game. Some refs are more lax while others can be very strict.
Here is the long answer:
Indoor: In the time of side-out scoring (the 90s) there was only arm passing and setting was reserved for the second hit by the setter only. However, rules began to change with rally scoring and overhead setting serves became a common place, especially in men's volleyball. For this initial serve receive pass (and this one only), the ball could come out very dirty with almost any amount of spin. This made serve receive much easier (especially for float serves) but many volleyball purists saw this method of serve receive as a way of devaluing the game. There is currently an effort now of reverting back to the more traditional, arm passing only way serve receive.
Beach: In beach volleyball the rules are much more strict. There is no setting on serve receive and the ball has to come out almost perfectly when setting the second ball. Because of this, many players elect to "bump-set" the second ball instead. However, in beach, a more "deep-dish" approach to setting is allowed to help keep the amount of spin down. AVP player Matt Fuerbringer has a great example of this type of set. These types of "deep-dish" sets would not be allowed indoor because the player holds onto the ball too long, but it is acceptable when playing beach, under the right circumstances.
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