Surely that can't be right - had he done a flight review, or what, to trigger the transfer to Part 61?
If he did a flight review and whoever did it sent in the flight review form to CASA, and your mate sent in the transfer of CAR5 details form, and a new photo (<6 months old) if they needed it, that should be all fine.
What happened to make them say he couldn't fly until he had the Part 61 licence?