It works now, Im not realy sure what was wrong but I know that
improper declarations and sequencing had something to do with it. Here
is the final Code if your feeling brave :)

Sub BreakoutSheets()
Dim colHeadCol As Variant
Dim colHead As Variant
Dim srchCol As Variant
Dim strRngOld As Range
Dim strRng As Range
Dim x As Integer
Dim y As Integer
Dim rng As Range
Dim firstaddress As String
Dim rng2 As Range

'colHeadCol = Array("code") 'test set
colHeadCol = Array("CONFIG", "TYPE", "MO_Number", "CODE")
'complete set

For Each colHead In colHeadCol

'select prepared worksheet
Worksheets("Prepared").Activate

'Search the header row for the column heading
Rows(1).Select

'assign variable to column heading
srchCol = Selection.find(What:=colHead, After:=ActiveCell,
LookIn:=xlValues, Lookat:= _
xlPart, SearchOrder:=xlByColumns,
SearchDirection:=xlNext, MatchCase:= _
False, SearchFormat:=False).Offset(1, 0).Address

Range(srchCol).Select

'include used Column cells address in variable
Set srchCol = Range(srchCol, Selection.End(xlDown)) '.Address

'set strRngOld to something for the following test
Set strRngOld = Range("a1")

For Each strRng In srchCol

'Sets strRng to the the previous strRng
If Not strRngOld = "CODE" Then
Set strRng = strRngOld
End If

If strg = strRng Then
Do Until strg < strRng
strRng.Activate
ActiveCell.Offset(rowOffset:=1,
columnOffset:=0).Activate
Set strRng = ActiveCell
x = 0
y = 0
strRng.Offset(rowOffset:=y,
columnOffset:=x).Activate
y = y + 1
If strRng.Value = Empty Then
Exit Sub
End If
strRng.Select
Loop
End If

'Note location of current strRng
Set strRngOld = strRng

With srchCol
strg = strRng
If WorksheetExists(strg, ActiveWorkbook) Then
GoTo SkipSheet
Else
Set rng = .find(What:=strg, _
After:=.Cells(.Cells.Count), _
LookIn:=xlFormulas, _
Lookat:=xlWhole, _
SearchOrder:=xlByRows, _
SearchDirection:=xlNext, _
MatchCase:=False)
If Not rng Is Nothing Then
firstaddress = rng.Address
Set rng2 = rng
Do
If rng2 Is Nothing Then
Set rng2 = rng
Else
Set rng2 = Application.Union(rng2,
rng)
End If
Set rng = .FindNext(rng)
Loop While Not rng Is Nothing And rng.Address
< firstaddress
End If
End If
End With

'Select all cells
If Not rng2 Is Nothing Then rng2.Select

Selection.EntireRow.Copy

PasteNewSheet 'Pastes new sheet and calls other setup
procedures
Next
SkipSheet:
Next
End Sub