Have a look at Melanie's thread, Communications Example : PC to PIC bi-directional dialogue. This should give you a little tutorial on working with strings and serial comms. Read her code carefully, until you can see exactly what she has the PIC doing and how it handles the data. Then, not only will you probably have learned a couple of "tricks", but you should see at least a couple of possible solutions for you project.

HTH,
SteveB