Nande VS Nanide

For 何で, when do you read it as nande and when do you read it as nanide?

I have never heard it said "なにで" always "なんで", but that could just me my experience. In any case, "なにで" is not in my dictionary so if it is said that way ever, it is likely informal.

To my knowledge, it is never read as "nanide".

何で(なんで)彼を殴りましたか。(Why did you hit him?)|(Did you hit him with what?)
何で(なにで)彼を殴りましたか。(Did you hit him with what?)

As KIX said, なにで is used when you ask what was used to complete the verb.

BTW, in this case, なにで has more formal tone than なんで.

"Nande" is an informal word and you shouldn't use it with a formal form.

Thus "なんで彼を殴りましたか。" with the formal ending "mashitaka" sounds awkward. To mean "Why....?", rather we use "naze" or "doushite" instead of "nande" in the formal usage like "なぜ（どうして）彼を殴ったんですか。". In the casual tone, you can say like "なんで彼を殴ったんだ/殴ったの。"

So, "何で彼を殴りましたか。" should be taken as "Did you hit him with what?"

In the casual form, "nande" can be replaced with "doushite".

"Doushite" is more formal than "nande" and less formal than "naze" while it can sound softest of the three.