parallax rfid code please help

char code[10];

Array to hold tag read.

char stephen[11]="8400338A85";

Array to hold known tag.

The arrays aren't even the same size. How can they possibly ever match?

  if(code==stephen)

This tests if the address of code and the address of stephen are the same. You know that they are not. Comparing the contents of an array requires a function, like strcmp() for NULL terminated arrays of chars or memcmp() for other arrays.