Is it ok to till my lawn and prepare it 2 weeks in advance of sod installation? Worried about the difference of “settled” and “compacted”.
It depends what state it is in before you start.
If you disturb the soil to the same depth over the whole lawn, it will settle evenly, and you won't notice. But if you are re-landscaping it and you have 3 inches of depth of tilled soil in some places and 2 feet of new topsoil dumped in others, the longer you can wait before you replant it the better (at least up to 3 or 6 months, not a couple of weeks).
The best natural soil levellers are rain and sunshine. Water fills up the spaces between the soil grains, and as it dries out the surface tension pulls the grains together. But you can't rush that process.
If you try to rush it with a heavy roller, you are right to be worried about compacting the soil too much for the grass roots to get established quickly (i.e. in the first growing season), but again, it depends on your soil type, Rolling that would be harmless on light sandy soil could make heavy clay the same as poured concrete, so far as newly laid turf or grass seed is concerned.
The problem with turf is that is "looks OK" for a few weeks after you lay it whatever you do, but if the turf roots can't penetrate the soil beneath it will never grow well, and a dry spell may kill it completely.