Revision Control Systems make generation of your "state C" easy.

In CVS, you need either the date or tag of C and do "cvs update -D $date" or "cvs update -r $tag"

In SVN, you are more likely to have a revision number, so you can use that with "svn update".

(From Alex: The situation I have in mind is when CVS and SVN are not helpful -- like, when someone dumped a boatload of changes into a checkin without keeping the history.)

Look up "delta debugging" "Andreas Zeller".

Git has "bisect", which takes a Good and a Bad checkout, and splits the difference in terms of lines changed. Repeat as necessary until your good last checkout is next to your bad next checkout. Very cool.