How to properly set HIGH/LOW PORTC3 on ATmega32A?
Look at the "Alternate Functions of Port C" section of the datasheet.  C3's alternate function is part of the JTAG port.  (C0 and C1 are not associated with the JTAG port.)  "When the JTAG interface is enabled, this pin can not be used as an I/O pin."  Try disabling the JTAG port and then see if your code works as you expect.