I found it -to set the pass mark:
1. Go to Course Administration > Grades
2. Select Categories & Items (Full View) from the Dropdown menu
3. Scroll across using the horizontal scroll bar at the bottom of the window, until you can see the editing tools. Select the edit wheel for an individual assessment item.
4. Enter the grade for pass!
I don't know why this isn't more easily accessible - you should be able to nominate the pass mark right at the beginning, when setting up an assignment submission. It seems like a fairly important ingredient.... why it's hidden all the way down in the bowels of the grade administration, I don't know...