Finding "C" wire on old heat pump HVAC unit

Question

I am wanting to replace my old round mercury filled Honeywell thermostat with a new wifi smart Honeywell thermostat, the only problems is I don't have a "C" wire on my current thermostat and need help finding my "c" wire. I looked at my wiring diagram and it appears to me that the "c" wire is just not being used. I have attached a picture with blue arrow pointing to what I feel is the "c" wire on the wiring diagram and what i feel is the "c" wire in the actual wiring. I am hoping that someone with more HVAC experience can verify this.

Answer 1

The highlighted wire is NOT the C wire.

If you read Note 3 it says "Transformer factory wired for 240 volts. Use red and blue leads for 208 volt applications". The only time you'd use that blue wire, is if the system feeding the furnace was a 208 volt electrical system.

If you look at the other side of the transformer in the schematic (labeled 24V), you'll see two yellow wires. One is R, while the other is C.