Given that a big amount of computational problems do involve quite some math and algos, not just pure knowledge of the language itself, it seems rather fitting at this kyu level.

Even more so, the problem is tagged "number theory" and "algorithms", so yeah, probably you researching the related math is indeed what the author had in mind.

I think the goal is to test your C and algorithm skills. A lot of the hardest computer science problems have solutions that involves maths. I guess that's just the way it goes!

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No, string literals are not allocated on the stack.

An issue is reserved for when there is a clear problem with the kata. The C kata is working fine. If you're not sure what's going on, post as a question instead. You're getting a SEGDEV probably from memory mis-management. You need to return a dynamically allocated, null-terminated C-string as a result, which will be freed by the testing suite.