I think the bigger concern here will be schools that want to see (or are curious why they did not see) a letter of rec from this person you researched with.
Your grading situation will likely be OK, these things happen and if you only have 1 C on your transcript, the grade isn't going to be what causes any stink. Just be ready to talk about it if it comes up in an interview and be aware that some schools have detailed policies about getting letters from people you researched with.