while(sentinel == 'y' || sentinel == 'Y') {	
               int counter = 0;		 
		
		do {
			printf("Enter grade\t");
			scanf("%d", &grade[counter]);
			printf("Counter is %d", counter);
			counter++;
		} while(grade[counter - 1] != 0 && counter < 9);

messed up

but 

int counter = 0;
while(sentinel == 'y' || sentinel == 'Y') {			 
		
		do {
			printf("Enter grade\t");
			scanf("%d", &grade[counter]);
			printf("Counter is %d", counter);
			counter++;
		} while(grade[counter - 1] != 0 && counter < 9);

worked