Using a 3x4 matrix keypad with I2C LCD

Using Arduino Programming Questions
6 
char RED[2]={
  '1','2'}; // our secret (!) number

void checkPIN()
{
  if (attemptC[0]==RED[0]&&
  attemptC[1]==RED[1])
  {
    correctPIN();
  } 

  else
  {
    incorrectPIN();
  }

  if (attemptC[0]==YELLOW[0]&&
  attemptC[1]==YELLOW[1])

Two letter codes are not exactly secure. Think how ugly this is going to look when you start using 8 letter codes.

You could properly define RED:
char RED[] = "12345678";

Then, properly store the key in attemptC:

    default:
      attemptC[z] = key;
      z++;
      attemptC[z] = '\0';

Then, use strcmp() to do the comparison(s):

if(strcmp(RED, attemptC) == 0)
  // red match
else if(strcmp(YELLOW, attemptC) == 0)
  // yellow match