Maximum level of profit attainable when discount factor is too low
I do not want to do all the algebra, but I give you a hint.
You are correct: You are asked about $\pi^C$ in your Condition (1) and you are also right that $\pi^D$ changes.

In your parameter setting with $c=0$: 
$$\pi^C := \pi (q^C, q^C) = (1- 2 q^C) q^C,$$
where $q^C$ is the quantity they coordinate on.

Then $\pi^D$ is the profit from best-responding to $q^C$ with some $q^D$:
$$ \pi^D := \pi (q^D, q^C) = (1- q^C-q^D)q^D,$$
i.e., $q^D = \arg max \quad \pi^D$. Now you solve $q^D$ as a function of $q^C$ and plug that into $\pi^D$. Having Condition (1) hold with equality gives you some $q^C$ that you can plug into $\pi^C$ again.