ok this is where I am confused. I have the capacitive sensor hooked up to the attiny not the arduino
So do I
nor did I know it even had it.
It does, see the picture above
you say "using 0 and 1 you are interferring with MISO" I don't see how that will interfere with MISO on attiny...?
Look at the picture PB1 (or 1) is
MISO used by TinyISP to communicate with your Arduino
I have capacitive sensor on 0 and 1 of attiny
Again 1 is MISO
and reading serial from attiny on PB3 (I thought this was default, I have always used this and it used to work fine)
No, the default is PB1 when you are using TinyISP.
If you use TinyDebugSerial, the default is PB3