Hi lonesomegame,
We see you're having some issues with setting up cellular service on the Apple Watch via Family Setup. We'd be happy to help get that headed in the right direction.
Which carrier are you using on the paired iPhone? It's also important to note that the amount of carriers/regions that support standard Apple Watch cellular service will differ from those that support Family Setup.
To check on that, you can head to the "Family Setup support" section here, and then select the "Jump to Family Setup carriers" link, which will take you to the very bottom section of the page.
If the carrier on the iPhone does specifically support Family Setup, and you still get the account error, you may wish to try checking with the carrier. The page also notes the following, "Check with your carrier to see if your iPhone plan is eligible for Apple Watch cellular service. If you have an enterprise or corporate cellular service plan, check with your company or carrier to see if they support this feature. Prepaid accounts and some older accounts may not be supported."
Take care!