\StrMid and \MakeUppercase problem

The xstring package carries out an \edef (exhaustive expansion) on its argument. Stefan has suggested one approach, but depending on what you want to achieve an alternative is to create an expandable version of the upper case command. There is one built-in to expl3, which needs renaming for use in a document:

\documentclass{article}
\usepackage{xstring,expl3}
\ExplSyntaxOn
\cs_gset_eq:NN \MakeExpandableUppercase \text_uppercase:n
\ExplSyntaxOff
\begin{document}
\newcommand{\cim}{c1095}
\StrMid{\MakeExpandableUppercase{\cim}}{1}{1}\space or 
\StrMid{\expandafter\MakeExpandableUppercase\expandafter{\cim}}{1}{1} ?
\StrMid{\cim}{2}{100} 
\end{document}

As I've indicated, I'm not sure what order you want the case change to happen in, relative to the string extraction.

Since you don't need to uppercase the string beforehand, this is a way:

\StrMid{\cim}{1}{1}[\temp]
\expandafter\MakeUppercase\expandafter{\temp}

We store the extracted string in a temporary macro and then apply \MakeUppercase to the result.

If strings are formed by "safe" characters (printable ASCII characters), the simpler \uppercase can be used:

\StrMid{\cim}{1}{1}[\temp]\uppercase\expandafter{\temp}