what are the best nesting materials for lineated parakeets?

Answer 1

I would recommend that you use a hardwood like aspen shavings that are available in the small animal section.
Pine produces phenols which have been linked to both respiratory irritation and increased liver enzymes in small animals.
This article discusses the health problems associated with the use of pine.
http://www.afrma.org/rminfo2a.htm

Answer 2

Regular pine shavings and plenty of it. It prevents splayed leg from happening.

Good Luck!