Oracle 11gR2, duplicating and refreshing cloned database

If my source database uses SPFILE then do I have create a PFILE from the SPFILE?

Yes, you need to create a temporary PFILE to use while duplicating the database. You will later switch the new instance to use the SPFILE.

Use

CREATE PFILE = 'path/to/pfile' FROM SPFILE;

You only need to create directories that are referenced in the PFILE or SPFILE. Which directories need to be created?

You will start the database as NOMOUNT to begin the duplication. This means the controlfiles will not be read, and so you don't need to have the directories in which the datafiles reside present in your new host. However, the directories references in the parameter files must be present. From your transcript,

DB11G.__oracle_base='/u01/app/oracle'#ORACLE_BASE set from environment
*.audit_file_dest='/u01/app/oracle/admin/DB11G/adump' 
*.control_files='/u01/app/oracle/oradata/DB11G/control01.ctl','/u01/app/oracle/oradata/DB11G/control02.ctl'#Restore Controlfile
*.db_recovery_file_dest='/u01/app/oracle/fra'
*.diagnostic_dest='/u01/app/oracle'
*.log_archive_dest_1='location=/u01/app/oracle/archive_logs'

You may find this chapter of the documentation useful: http://docs.oracle.com/cd/B28359_01/backup.111/b28270/rcmdupdb.htm#i1006474

You wrote:

After this rename process , I will try to restore database from rman backup. But this backup is not piece by piece copy.

Then this is not the method for doing this. In order to use the ALTER DATABASE RENAME FILE, the file have to already exist at the new location. Instead of this, you can (and should) handle this in RMAN:

sqlplus / as sysdba
startup mount
exit

Which you have already done, then:

rman target /

And run the following:

run
{
  set newname for datafile '+NEWDATA/XX/XX01.dbf' to 'M:\oracle\datafiles\XX\XX01.dbf';
  set newname for datafile '+NEWDATA/XX/XX02.dbf' to 'M:\oracle\datafiles\XX\XX02.dbf';
  set newname for datafile '+NEWDATA/XX/XX03.dbf' to 'M:\oracle\datafiles\XX\XX03.dbf';
  # ..., list all datafiles this way
  # alternatively you can use the datafile number: set newname for datafile 1 to '.../...dbf';

  restore database;
  switch datafile all;
  recover database;
}