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No, covenant can't target Tartaros in set aside. I also think it's probably a place ability not a set aside ability.
You raise an interesting question, Jordan. Is set-aside a special ability or a location? The answer is both. Then does Covenant with Abraham protect from set-aside special abilities or does it protect cards from moving to that location? The answer isn't entirely clear. Upon reading it, I assume it protects them from being moved to the location called set aside.Is it possible to move a card to the set aside area without using a set-aside special ability? I believe that's what Tartaros is doing. Maybe it has an implied set-aside special ability? That's not how I see it but I'm open to the idea. I don't believe Tartaros fits the definition of a set-aside special ability as it's written in the REG.Finally, where are the cards that are being set-aside? Since Tartaros uses "instead" the "place here" portion of the ability replaces any capture or discard effect. The demon remains in play where it is protected from Covenant with Abraham. If it's not a legal target to move to Tartaros, the capture or discard ability will still take effect.TLDR: I believe Covenant with Abraham protects Evil Characters in play from moving to the set aside area (not just from set-aside special abilities). If that's accurate, it stops captured or discarded demons from moving to Tartaros.
I thought TGoTW + Pan Voided and Oak draw. So wouldn't the evil characters still be alive or is that different?