"Is this method in that application note is used for setting MODBUS crc bits?"

No, but it is quite close in that it uses the correct polynomial and presets the CRC register to all ones. However it stores/transmits the complement of the resulting CRC, whereas Modbus does not use the complemented result.

Mr. Brooks in his fourth post and Mr. Redding have given you the proper method, which implements the CRC method in the Modbus protocol specification. You know, all of the error checking options, including CRC along with C language implementation are in the specification document. If you do not have it already, I strongly recommend that you get the spec(s) from www.modbus.org. After all, you would think they would be the ultimate authority on their protocol!