What to do about nails in hardwood floor
I wouldn't pull the nails out. Actually, I'd pound them in a little further w/a Nail Set. You only need to do it about 1/8th - 1/4th of an inch. After you've refinished the floor (but BEFORE you've polyed), I'd fill them w/putty. Try and find a putty that matches. If you can't, get a color that's a LITTLE lighter than the floor stain you used, and roll the putty in between your fingers w/some of the stain on it. This will 'darken' the putty for you a little. Mix it good between your fingers. Be SURE to keep a stir-stick in the can because the solids will settle out VERY quickly. In fact, every time you want to 'dip' into the can, go ahead and stir it.
As for the nails - Yes, I believe the previous owner was trying to stop the squeeks. This is why I'd leave them in. YOU will notice the 'puttied holes' more than anyone. In fact, you'll have to LOOK for them. This is why you do as I suggested w/the putty and your stain. Again, do this AFTER you've stained but BEFORE you've polyed. AFTER the putty hardens, sand lightly, and I mean LIGHTLY!!! Try and just get the putty in the hole. You really don't want to go sanding the 'finished/stained' floor.
My best to ya and hope this helps.
Jay J -Moderator