I would contact Milgard, send them the photos, see what they say.

Looks like poor workmanship to me.

Don't think we need more photos. Obviously a hack job that needs to be corrected. The window fin issue aside, I question also the flextape/pan/sill waterproofing. It looks horrible!

Don't know what you plan to do with the input here but in lieu of outsourcing this to the internet, hire an independent home inspector/window installer/reputable custom home builder and have him/her come out to look at this specific issue and write up a report. Present that to your contractor. There won't be a whole lot of high ground in light of a written report. Nothing like an impartial report by a reputable party that doesn't have a horse in the race. In addition to that, hiring somebody and showing your willingness to write out a check to get to the bottom of the issue responsibly will go a LONG way to showing your serious and mean business.

What ARG said, plus although they calling them "nailing flanges" or "fins" they really are not meant to hold the window in place and as you know they help create your weatherseal. The flanges get basically loosely tacked to hold the units in place while they are plumbed, leveled and squared in the openings with shim.

I appreciate your comments and suggestions.

Our contractor has told us that he is not concerned about this.

I'm sure that's absolutely true!

He'll be paid in full and long gone when you start having moisture problems.

As a builder, I deal with exactly the same issues from subs. I'd be rich if I had a Loonie [C$1] for every time I've heard, "This is the way we always do it. No problems." Or, as an ex-building partner used to say, "So you're Mr. Building Code, eh?"

Here's a well-illustrated guide on flange window installation from Fine Homebuilding. Or take a look at Milgard Montecito's installation directions.

At this point, ARG's excellent suggestion may be your only resort.

I am an engineer and comp sci person. I'm not a civil engineer - but I've never known a component - such as your nailing flanges where it's OK to damage them to that extent upon installation. In my 'professional opinion' some unsupervised 'hammer mechanic' is responsible for that damage.

The nails are too close together in some of the photos. I wonder if this was caused by using a nail gun to nail the windows? I'm not sure if it is a rule, but we always nailed windows by hand.

Yellow coated roof nails, definitely from a gun and pretty much universal no-no for windows, lol.

I don't know what the applicable building code is but the 2012 IRC says:

SECTION R612 EXTERIOR WINDOWS AND DOORS

R612.1 General.
This section prescribes performance and construction requirements for exterior window and door installed in wall. Windows and doors shall be installed and flashed in accordance with the fenestration manufacturer’s written installation instructions. Window and door openings shall be flashed in accordance with Section R703.8. Written installation instructions shall be provided by the fenestration manufacturer for each window or door.

Millard's published instructions are the same as AAMA 2400-10. In that document Note 8 covers this situation:

Damn, should have thought of that! Get the building inspector in. So it's not you the non-pro who's making a fuss. It's the fuzz.

Agree with Sophie that this probably isn't the only problem that is wrong with the build.

I appreciate your comments.

If there is sufficient sealant behind the fin, I would say that a few cracks are fine. The amount of fasteners used all around the frame is over kill to begin with. I would ask them to add some through-frame fasteners in the areas where the crack occurred.

As someone else already noted, contact the window manufacturer directly and inquire about the cracked fins.