Hi and welcome to the forums.
If the judgment is old and they update the TL to show paid it can hurt your score because it will update to a current date and make it look new.
Paying in full or settling, in general, have no effect on your score. FICO looks at paid and unpaid the same.
If you choose to settle, they can try to collect the remaining balance. You would need to make sure a settlement letter clearly stated you would no longer be financially obligated for the debt.
Settling for less than the full balance is not something you want on your CR.
