I replaced my current Heat Pump system that uses R-22 with new one that uses Puron (410A).
The system I got is :

Carrier 25HPA542 (preferred series) Heat pump
Carrier FE4 (infinity series) Air Handler
Carrier Infinity series Thermostat

My question:

I am using the existing lineset ( as it goes through finished basement etc). My contractor says that it is OK and he flushed it with Nitrogen. I have read that it needs to be flushed with R11 and Nitrogen, but he tells me that Carrier does not want R11 to be used and to flush only with Nitrogen, else the compressor warranty will be void.

Otherwise, the dealer was very easy to work with, except the confusion above.

Can someone help on what is the appropriate way to use the old lineset.

Bet you have things confused. R-11 and Rx-11 are likely two different animals:

BACA HVAC - Rx11 Flush by Nu-Calgon (http://baca-hvac.com/rx11_flush_by_nu-calgon)

Bet you want to flush with Rx-11.

The oils are incompatible, but they have a difficult time migrating from the compressor. Nitrogen would help flush particulates.

The next damaging contaminant is non-condenseables, particularly water. That's normally eliminated by pumping and/or heating the lines.

There should not be any harm flushing with Rx-11. Flushing is recommended when changing from R22 to R410A. Most want to replace the lineset.

I would deffentally flush it with the r11 fulsh kit.