Not Homework Just Personal Study:
Statement of Theorem: A metric space $(M,d)$ is complete if and only if every nested sequence of closed balls $S_n=\{B(x_n,r_n)\}$ with $\lim_{n\to \infty}r_n=0$ satisfies $\cap_{n=1}^{\infty}S_n\neq \emptyset.$
The forward direction is clear. For the backward direction, the following construction is given.
Let $x_n$ be cauchy in $(M,d).$ We want to show that $x_n$ converges to $x \in M.$ By that fact that $x_n$ is cauchy, for each $i \in \mathbb{N}$ we can pick $x_{n_i}$ such that $d(x_n,x_{n_i})<\frac{1}{2^i}.$ Let $S_{k+i}$ be the closed sphere of radius $\frac{1}{2^{k+i-1}}$ with center $x_{n_{k+i}}.$ I do not understand why the $S_{k+i}$ are nested. We want to show that $S_{k+2} \subseteq S_{k+1}$ for all $k.$ If $y \in S_{k+2}$ then we know that $d(x_n,x_{n_{k+i}})<\frac{1}{2^{k+i}}$ and we know that $d(x_{n_{k+2}},y)<\frac{1}{2^{k+2}}.$ Then
$$ d(x_{n_{k+1}},y) \leq d(x_{n_{k+1}},x_{n_{k+2}})+d(x_{n_{k+2}},y)\leq d(x_{n_{k+1}},x_n)+d(x_{n_{k+2}},x_n)+d(x_{n_{k+2}},y)$$
So that
$$d(x_{n_{k+1}},y)\leq \frac{1}{2^{k+1}}+\frac{1}{2^{k+2}}+\frac{1}{2^{k+1}} =\frac{1}{2^k}+\frac{1}{2^{k+2}}$$
But we need to show that $d(x_{n_{k+1}},y)\leq \frac{1}{2^k}$
I'm not sure why this is true or what I am missing.
Thank you in advanced for any help.
The construction you give needs clarification, and the lack of clarity is likely leading to your confusion. When you write
you (or whoever gave the argument you are citing) need to quantify that this is true for all $n>n_i$. And at later points in the argument, you also refer to $x_n$ without specifying which $n$ you are talking about. This turns out to be a source of confusion for you later in the proof.
Also, the definition of $S_{k+i}$ really doesn't need two indices - you could just as easily define $S_k$ to be the closed ball of radius $\frac{1}{2^{k-1}}$ centered at $x_{n_k}$. It's not strictly speaking incorrect, just very, very awkward and confusing notation.
Now, having clarified that, in the line
the final inequality is completely unnecessary, and you can simply directly write
$$d(x_{n_{k+1}},y) \leq d(x_{n_{k+1}},x_{n_{k+2}})+d(x_{n_{k+2}},y)\leq \frac{1}{2^{k+1}} + \frac{1}{2^{k+1}}=\frac{1}{2^k}\text{.}$$
The second inequality follows from the definition of $S_{k+2}$, as well as the earlier remark that $d(x_n,x_{n_i})<\frac{1}{2^i}$ holds for all $n>n_i$, including in particular, $n=n_{i+1}$.