eamc,
set1 has a list as it's basic element - so if you want to get a string entered by the user in response to a raw_input, this may be the way to go:
set1 = set([raw_input("What's the magic word?: ")])
Unfortunately, I don't have 2.4 installed (yet) so can't verify this, but if the above doesn't work, the solution below is bound to:
x = [raw_input("What's the magic word?: ")]
set1 = set(x)
Hope this helps,
- Problemsolver