One issue might be the fact that you have LCD datapins overlapping at least one of the pins that you're using with SHIFTIN/SHIFTOUT.
This code does not match comment: TRISC=%00000000 'set half C for in/out.
Also, note that my suggestion was to try mode 6 on SHIFTIN - not SHIFTOUT. Not that it would make any difference untill SHIFTOUT is outputting data.