I think the overarching advice here is clear, regardless of the exact specifics at your school/program.
1) Document, document, document. Get as much documentation as you can of the issues impacting your ability to do your academic work this semester.
2) Follow the policies and procedures that are outlined in your school's/program's guidelines. Programs are required to have published rules about how dismissing someone from a program works. If they followed the procedures, you will have a harder time arguing for leniency after the fact than if they didn't follow their own procedures.
3) It sounds as though your last academic class was for this semester, but that you will not apply for internship until fall 2018 because you need to work on your dissertation and whatnot. That also gives you time to retake a course if necessary, before you apply for internship or at a minimum, before you go on internship. I would investigate when and how you can take a course that would make up for the course you got a C in; if it is required for your program to take this course, you'll need to know if it's going to be offered again, when it will be offered, and whether there are other classes that will be offered that would fulfill that requirement.