Confusing signals have created this problem. The dog does not realize now that carpets are a no. You need to back up and redo the housetraining scenerio all over again. If you did this by crate training then go back to the crate. If you didn't the first time around then do what you did then. Make sure you give lots of praise and excitement to the dog when it goes outside. Only correct the dog inside if you see him going. After the fact is useless punishment. To correct the dog just give a firm No and take him promply outside and tell him "Go Potty". There are many past threads on house training techniques if you do a search.

I personally find the crate to be the quickest way to teach the dog the right way to potty.

As far as crating at night, I probably wouldn't but would close the bedroom door so the dog could not get up and leave the room whenever the urge to pee hits.