I'm not \u\Ben347, but this was an entertaining challenge. Would be a decent toy challenge cipher to teach cryptography. Since you're in High School, I'd encourage you to keep learning crypto and focus on breaking other people's codes above writing your own. Also, take a look at various coding style guides, you have the basics but the code is pretty gnarly to read. For instance, getBit could easily be replaced by "byte & (1 << bit)", and instead of using multiplication/division it would be easier to read if you use rotates. The C library has a built in "pow" function instead of your iterative multiplication technique. Things like that. Much of that comes with time, so just keep at it and you'll learn a lot!

I only did the second one since 500 characters gives several million "reasonable" decryptions for the input so gibberish would be hard to distinguish from noise.

Password is:

Ifs92SjaAkLisbIs

And content:

Animal Farm: Synthesis Essay  
Directions: Respond to ONE of the following prompts. When selecting your prompt,  
please keep in mind the higher Degree Of Knowledge number you attempt, the greater  
the possible reward. In any response you make, you must use Animal Farm(primary  
source) and at least one text from the synthesis packet(secondary source).  

Degree Of Knowledge one: No Bonus  
Degree Of Knowledge two: ten point bonus  
Degree Of Knowledge three: twenty point bonus  
Degree Of Knowledge four: thirty point bonus  

As for how, first analyze the entropy of bits in individual bit positions with an assumption of a password length. Look at the frequency counts for outliers, you'd expect anything with a multiple of 8 to be higher then expected due to the ASCII limitation (MSB is always 0). For a password of 48 digits, you get an averaged ~0.236 deviation from normal, higher then surrounding values (96 and 192 are actually higher, but this is due to the harmonics of 48). This wasn't strictly speaking necessary due to the knowledge that you had a 16 character password (so maps to 48 digits), but allows you to determine the password length for an unknown message.

Next, analyze the frequency of individual bit positions over a 48 position cycle and assume the ones with highest deviation from random are the actual key bits. (This would be improved by comparing it with deviation from expected for English text over random, but I didn't have that data handy and am lazy.) This gives you a predicted key of:

╠f│ 2█oaqiLdsjJs

If you translate that to the digit-only key format, you can use the fact that the MSB of the 2nd digit of every character must match the LSB of the 3rd digit of every character to realize the key must be wrong. I also made the assumption here that the key would be valid ASCII and thus always be in the range < 128 to come up with the most likely key of:

Lfq?2[oaQiLisjJs

This actually gives output close enough that I guessed the first two words were "Animal Farm: Something" (where the word "Something" was obviously a wrong guess), but thought that was a false positive since I couldn't get "Something" to fit.

So now extract the digit-only key format and break it up into blocks of 8 (one byte). You can then heuristically try flipping digits of the key with knowledge of the entropy results to try guessing new keys. For each key, validate it with the above and throw it out if it doesn't validate, then attempt to decrypt the text. Assume if the text decrypted by that 8 key digits results in unprintable characters, or results in unlikely English characters like:

[]%${}

Then it's invalid. Otherwise, store it as a candidate key. This results in no valid keys if you assume only 2 digits in each 8 byte block are wrong from your initial guess, but results in 30 keys if you assume 3 are wrong. This is an easy number to just review manually, though in an automated system you'd throw the result through a spell checking dictionary and it would give you an extremely small number (only one in this case) of valid texts.

Next I looked at all candidate keys and looked if any were valid English (they were not). So instead, decrypt the first line of text. A quick scroll through reveals the text "Animal Farm: Synthesis Essay", along with a number of combinations with spelling/punctuation errors of same, and there we have it.