"Obviously C wasn't used to build the OS that C was built on."
Actually.... C was pretty much was made as the language they were implementing Unix in (which was, of course, the operating system that C was built on.
In 1969 Dennis Ritchie started to create the C programming language for use with UNIX. He couldn't have created the OS on the computer on which he began creating C in C because he hadn't created it yet. If he created it on a UNIX machine, then he created C on an OS written in assembly language.
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