Why doesn't anything from if key == "c" then work?

I agree with John's comment that the UserInputService should be used instead of KeyDown and you can read all of the events and functions here. Also, you have your if statements inside of each other, which is hard to tell because of the spacing.

local IS = game:GetService("UserInputService")
local PLAYER = game.Players.LocalPlayer
local MOUSE = player:GetMouse()
local shaUp = false
local ENABLED = true
local sha1 = true
local sha2 = false

-- InputBegan fires when they player presses anything, button,mouse,controller
IS.InputBegan:connect(function(INPUT) -- INPUT is what they pressed
	if INPUT.UserInputType == Enum.UserInputType.Keyboard then -- this checks if it was a keyboard button pressed
		if INPUT.KeyCode == Enum.KeyCode.X and ENABLED == true and shaUp == false and sha1 == true  then 
--this checks the key pressed and all that all of those boolean values are either true or false
			ENABLED = false
			shaUp = true
			sha1 = false
			local y = game.ReplicatedStorage.Me:clone()
			y.Parent = game.Workspace
			y.Name = player.Name
			y.Torso.CFrame = player.Character.Torso.CFrame*CFrame.new(0,0,5)
			sha1 = true
			shaUp = true
			print("Work")
			MOUSE.Button1Down:connect(function(m)
				y.Humanoid.WalkToPoint = mouse.hit.p
			end) -- ends the mouse
			wait()
			enabled = true
		end -- this ends if X was pressed
		if INPUT.KeyCode == Enum.KeyCode.C then 
			PLAYER.Character.Humanoid.Health = 0
		end
	end
end)

Please remember to accept my answer if it is correct or helps you solve your problem. If anything errors or there is anything wrong please comment and/or message me before you start downvoting. ;)