Where do I connect a C wire in an old Furnace?
So I am assuming the wire you want to use as a common is the blue wire. Of course you are going to connect the blue to the C terminal at the new t'stat. Now you have to ground your blue wire at the furnace, but in order for you to get it to work you will also have to make sure your one conductor of your 24V transformer is grounded also. The power (red) conductor is attached to the ungrounded side of the transformer and your blue is attached to the grounded side. 

You need to verify that the transformer grounded. There is usually a schematic on the door of the furnace that will show you where it is done. If that is not there then you need to trace out the wiring to see if you can find it. If it is not grounded then you will have to ground it yourself. I really can't tell you how since I am not on site.

There is one other option. Most t'stats do not need a common if the stat has a battery back up. The stat will just run off of the batteries and you will need to change it out every six months to a year. You might want to check with the manufacturers help line to make sure it has that capability.

Hope this helps.