Re: TMR1 not working as counter
Remove this line:
T3SOSCEN = 1;
It does not matter that you have have set TMR3 to take its clock input from RB5, setting the T3SOSCEN bit still starts the secondary oscillator, which makes pin RC0 the SOSCO pin.
See: "FIGURE 2-4: SECONDARY OSCILLATOR AND EXTERNAL CLOCK INPUTS" in the datasheet.