The ceramic pilot will only heat up when I pinch one hose and the unit will fire up when I pinch off the other hose. What is causing it!

Check vent for blockage (birds nest etc at vent termination on roof). The hosed you are pinching are going to the pressure switch I assume. It may also be as simple as a bad pressure switch. It could also be a bad draft inducer. Worst case, cracked heat exchanger. I would call in a tech to look the system over and solve the problem. Lots of variables here. Hard to trouble shoot over the net. Good luck and please do let us know how things turn out.