How does the player setting affect the elemental damage of mobs?

In regards to players 1-8, there is no difference between elemental and physical damage. It's a flat percentage damage increase across everything.

Each additional player in the game increases the damage dealt by 6.25%. This bonus is applied after the champion or unique bonus and is further amplified by critical strike. The bonus is the same for both ranged and melee attacks, but not every monster skill in the game is increased. This bonus does not apply to classic Diablo 2.

Player setting -> Damage & AR Bonus

1 -> 00.00%

2 -> 06.25%

3 -> 12.50%

4 -> 18.75%

5 -> 25.00%

6 -> 31.25%

7 -> 37.50%

8 -> 43.75%

I have never heard or seen anything about special cases when it comes to modifying damage between physical and an element. I've also never seen anything when it comes to lowering damage percentages based on enemy type. The only thing that I can think of is when you are raising the /players higher, certain hero skills are capped, but that also depends on which version you are playing. A link to more information on player skills is here and a link to the bone fetishes is here.