PIC XC8 arguments redeclard
In C it is best practice to use prototypes.  Generally, you want to declare your function prototypes in a header file.  For your code perhaps call the header file BCD.h and create it in the 'Header Files' section of MPLAB.  The header file code should look something like the following:

#ifndef BCD_H
#define BCD_H

uint8_t updateBCD(uint8_t);

#endif 


then add the following line to main.c

#include "BCD.h"


Explanation:  In your code when the compiler encounters the line "digit = updateBCD(digit)" the compiler does not yet know about the function updateBCD.  This is the implicit declaration. Moving the declaration of updateBCD to before main helps in that the complier knows about updateBCD before it encounters "digit = updateBCD". 

From a programming stand point this is still somewhat undesirable because then you have to worry about in which order to declare your functions.  Aside from being annoying to the coder, it can also make the code more difficult for others to read and interpret.  Using functions prototypes in header files alleviates these issues.