Seeing that $y$ is a function of $u$, (in other words, you're computing $\frac{dy}{du})$, then $$\frac{d}{du}(u) = 1\neq 0$$
So you cannot drop the right-hand side of the application of the product rule.
I'm also puzzled how/why you introduced the constant $c$ in your move to the final line of your work. Typo?
Re: your edit(s). Your answer is now correct.
But note that you can stop at the the second line $y' = \cdots$, in which you applied the product rule to differentiate $y$. Of course, you'd want to simply drop the factor of $1$ on the right term of your derivative.
After calculating the derivative, you seem to have distributed $u$ over the left term, but then in the next line, you factored out $u$ (which you had just distributed), ending precisely where you were to start with: the expression immediately following $y'$.