You seem to go about things the long way. For example your bit set routine:

void setCacheFlag(unsigned char position){//takes position of bit to set, from 0 to 7
//this outlining section contains the cache code
//always sets that bit, for simplicity
	unsigned char scratch=0x80;
	unsigned char i=0x00;
	if(position>=8){
		while((position-=8)>8){
			i++;
		}
	}		
	scratch>>=position;//put bit into proper position
	cacheUsed[i]|=scratch;//set that bit in the used flag
}

From what I can understand you have an array of bits and you want to set a particular bit in that array. To that end:

const char bit_masks[]={1,2,4,8,16,32,64,128};

void setCacheFlag(unsigned char position)//takes position of bit to set, from 0 to 7
{
cacheUsed[position>>3] |= bit_masks[position & 0x07];
}

Here we've used the fact that there's 8 bits per byte and shifting right by 3 bits does a division by 8.


For non binary numbers we could use division and the modulus operator:
cacheUsed[position/8] |= bit_masks[position % 8];

We've avoided using loops and (hopefully) the code is a bit more obvious.