Please post pictures.

How are flooring nails going thru to a ceiling? The 2nd floor joists are in between and typically a minimum of 2x6's with plywood. Definitely more info is required and pics would be the best.

If that’s true, they are either using 10” spikes or you dont have properly supported upper level.

... or maybe the subfloor is the finished ceiling on the first floor. She should have used shorter fasteners, (assuming the op meant ceiling instead of walls).

She should have changed the size of the nails after you noted the problem. It's her fault to not match nails to the house. Her explanation is nonsense.

I have no idea how flooring nails penetrate the wall!

Who selected the flooring?

And what exactly is the flooring? Solid strip nail-down? What nail length does the flooring manufacturer recommend? Usually 1 1/2" nails for .5" flooring and 1 3/4" nails for .75" flooring. Using shorter nails than the manufacturer specifies is generally not a good idea. If the nails are going to penetrate where it matters, then you need to choose a different flooring. Glue down or floating, for instance.

Or add another layer of subfloor before installing the finish flooring.

I still don't understand how are flooring nails go through to a ceiling. This may mean the contractor may have used the wrong size of nails or there is a massive variance with the thickness. The best solution is try negotiate with them further ... argue your case and see if you can settle on a solution.