I am not sure what you mean by pins 2 and 3 on the 232?
And I was using portC in my code.

The purpose of this exercise is to make sure the PIC is comunicating properly. So look at the PBP manual for the digram to connect the PIC without a 232.

This way we have eliminated a "variable" in the system that could be causing trouble.

One PIC and one PC with a couple resistors.