$A = \left(\begin{array}{cc}1 & 0 \\1 & 3\end{array}\right)$.
I find the eigenvalues = 1,3.
The eigenvector corresponding to 1 = $t(1,-2)^t$. The eigenvector corresponding to 3 = $r(1,0)$.
Then I form $C=\left(\begin{array}{cc}1 & 1 \\-2 & 0\end{array}\right)$. But $C^{-1}AC$ is not a diagonal matrix. Rather it is:$\left(\begin{array}{cc}2.5 & -.5 \\-1.5 & 1.5\end{array}\right)$.
What am I doing wrong?
Your eigenvectors are wrong. They should be $(-2,1)$ and $(0,1)$. The $C$ formed by this works.
http://www.wolframalpha.com/input/?i=%28%7B%7B-2%2C0%7D%2C%7B1%2C1%7D%7D%5E%28-1%29%29%7B%7B1%2C0%7D%2C%7B1%2C3%7D%7D%7B%7B-2%2C0%7D%2C%7B1%2C1%7D%7D