I would follow your installers recommendations. If the new window fits tightly, caulk (window to wood) is sufficient when foam wont fit. Ideally, you want the window as tight as possible, while being able to square it up in an imperfect opening.

ok.. so as long as its a tight fit no foam is used? he said under 1/4 inch is tough. he said the fill perimeter foam wrap plus a good caulk will be enough. if its a big gap, he will foam. he akways foams the sill, whatever that means.

Sounds about dead on in my book.

The sill is foamed because there is a progressively larger gap under it as the wood sloped sill against the square vinyl bottom creates more of a gap.

so ordering the window a bit smaller so he can foam will not make a difference?

No window opening is perfectly square. When measuring a window we take the smallest measurement and then deduct 1/4 of an inch from it. That means that if the opening is out of square by 1/4 of an inch, that the window could be 1/2 inch off in certain places. This is why foam insulation is used. You are better off having the opening measured as tight as possible and then any gaps filled with foam rather than creating a large gap by intentionally ordering the windows too small with the intent of filling that gap with foam.

Think about it. Why would you want to order the windows too small just so foam insulation could be added?

point well taken. i guess when installing window from inside, its impossible to foam around outside perimeter? my contractor said the exterior stops would prevent that.

That is not possible. Most pros (at least in my area) remove the exterior stops for installation rather than the interior.
That said, it doesn't make much difference which side the foam is applied from, it will still seal that gap.

if its an inside install, how would foam be applied around the exterior perimeter?
if it was an exterior install then the exterior stops would be removed and foam applied. how cannfoam be used, other than sill, if the stops are still in place due to an interior install?

You don't foam the exterior if it is in an interior install.

Foam is installed from the inside at that point if required.

thanks everyone

What he ^ said. :D