Short answer is start again - big bang programming is rarely effective.
Build the program in small steps - like before you charge off and see if a char is in an array, get the basic char input routine working.
Until it works, you're not going anywhere, so there's no point writing more code. It's a lot easier to debug a small bit of code than a large bit.
Then put that to one side, and try this program
Code:
int main ( ) {
char word[letters] = {'m','o', 'u', 's', 'e'};
int location;
location = search ( word, letters, 'a' );
printf( "Location is %d\n", location );
location = search ( word, letters, 'e' );
printf( "Location is %d\n", location );
location = search ( word, letters, 'm' );
printf( "Location is %d\n", location );
return 0;
}
Again, more testing of the code in small bits - you can focus on the search, without worrying about input.
When you've got enough component ideas working, then you can start to bring them together.