Consider the following two functors that go $C^{op}\times C\to Set$, where $X$ is an object in $C$
$(A,B)\mapsto Set(C(X,A)\times A,B)$
$(A,B)\mapsto Set(C(X,A),Set(A,B))$
Are these two functors isomorphic? (i.e. is there an natural transformation between them that is an isomorphism?) I want to think that they are due to $Set(A\times B,C)\cong Set(A,Set(B,C))$, but I haven't grasped all the details.
Yes, in the end the two functors are isomorphic, but you need some care in specifying in what sense $Set(X,Y)\times Z$ is an object of $\cal C$ for every $Z$ (instead of $Set(C(X,A)\times A,B)$, you want to write ${\cal C(\cal C}(X,A)\times A,B)$, or the only way to make $Set(C(X,A)\times A,B)$ type-check is to impose ${\cal C} = Set$).
The correct statement involves tensors over the category of sets.
Now, the adjunction given by the fact that $\cal C$ is tensored $$ {\cal C}({\cal C}(X,A)\times A,B)\cong Set({\cal C}(X,A), {\cal C}(A,B)) $$ is a natural isomorphism in all arguments, and the claim follows.