|Here are some options. First, it might not be a network problem.|
simple: can it be a hijack? did u scan ure friend's computer?
normal: clean the registry and temp file, and temporary internet files and all the cash of your friend's computer. try again.
Annoying: in network connection, TCP/IP settings, Try to detect ip adress automatically from ure pc and than from ure friend's pc. than check the details of connection from both pc. See if there are different DNS or DHCP IP Settings.
Hard: Install the latest drivers of your friend's network card. If it still doesn't work, Can u check the network card of your friend on another pc?
Brutal: If both PC s are identical but ure friend still cannot connect, and if ure friend's hardware is super clean, registry ok, network settings properly configured, and no hijack or virus present, than it can be a Hard drive boot sector hijack. Check if there is a hidden partition in ure friend's PC. (usually the boot sector). If there is one, format it and merge it to the System partition. You can do this easily by installing a new OS on that partition. (vista setup detects all partitions when installing).