Here is the problem - you take the signal from the button connected to pin C4 and use that as a clock for the ledst0 flip-flop. This is not how you use an FPGA. Pin C4 is not a clock input pin, which cause the error 1108 you see, and logic signals like btnl should not be used as a clock.
FPGAs are intended to be used for synchronous logic designs where a large number of flip-flops are clocked with a common clock. In order to make this possible the clock is distributed to all the flip-flops in this clock domain using special clock buffers and clock networks. The source of the clock is typically coming from an input pin on the FPGA and only a select few pins can be used as clock input. The input clock can be used as is or can be feed to a clock management tile that has resources like PLLs and DCMs that allow you to create a clock with different clock frequency.
The Nexys3 board has a 100 MHz clock input signal connected to pin V10 that can be used as system clock. This is what the Nexys3 manual states:
Try this code instead:
BTW, your switch might "bounce", so you might have to de-bounce the signal from the switch.
See What is debouncing?