I knew this couldn't be true (what your tech said), so in less than a minute of Googling I found that Xerox publishes a "Specialty Media Prospecting Guide" that states that carbonless (NCR) forms ARE allowed with the 560. It's on page 9.
What you don't want to do is use carbonless paper made for offset, which will gum up your machine but quick. You want to use sheets made for DIGITAL. Even so, there is a footnote that says "Limited use of fewer than 500 sheets."
So, actually, your tech is half-right.