About 5 years ago, I had my house re-clapboarded (and painted with primer and 2 coats of Sherwin Williams paint). It came out beautiful. Just about the end of last year, I noticed nail heads rusting through the paint. I assume (sadly) that my contractor must have used the wrong nails. What can I do at this point?
You are correct as it does sound like your contractor may have not used stainless steel nails which would have been more expensive but the preferred method of attachment. Unfortunately at this point, there's not much more you can do expect to keep the siding well primed and painted. It would not be worth the effort to remove and replace the nails.