Bad window installation

I had Dbl. hung custom wood windows (full frame) ordered and installed by my contractor. The interior rough opening is 34X64, the new windows are 32X62. They were not framed out, no insulation was installed, the top sash falls down when window is unlocked, and they are not a tight fit. My existing interior trim only covers 1/8 of an inch of the window frame (left and right sides). The contractor insist that the staples in the frame are supposed to be visible, that I just need to put some wood putty over them. He also cut one half inch off of each of the interior window sills reducing them from two inches to one and a half inch He never did explain this alteration. And, there is this two inch high (bumper) that sits up against the interior sill. He also increased the size of the exterior window trim by one inch on each side and two and a half inches at the bottom.
I say the windows are too small and that the warranty is probably void due to improper installation and any alterations necessary should have been in the contract or at the very least discussed with me first. He insist that this is the largest window he could have fit into he R/O. Please advise.