Every transaction I've had with Musician's Friend has been positive. I ordered my SG and both Les Pauls from them - no hassles, no broken / bad instruments, no lost orders. The only issue I have with MF is backordering - sometimes it takes a while to get what you order if it's not already in stock.
Considering my experience, and the flood of orders MF takes every day, I think your buddy's experience was the exception.
One caveat - every guitar I've ordered from MF shipped with a hard shell case. That in itself is major shipping protection.
Guitars: 2008 Gibson SG Classic, 2006 Gibson Les Paul Standard LE, 2002 Gibson SG Supreme, 2001 Gibson Les Paul Studio Plus, 1996 Les Paul Studio Gem, American Deluxe Double Fat Strat, Bluesville "Super" Strat Copy, MIK Fender "Limited Edition" Tele, JD Bluesville "Night Pilot", Yamaha AES 820, Steinberger Spirit GT Pro, Taylor 355CE, Ovation 1897 Adamas, Ovation CC057 Celebrity
Amps: Axe FX centered rack rig, Mesa 4x12 cab. Germino Club 40, Johnson JM150 Millennium, Johnson JM250 Millennium, Gibson Titan Medalist Frankenstein.
Effects: Tonebone Trimode, EH Holy Grail, Boss CH-1, Dunlop Crybaby Classic, Framptone Amp Switcher, THD Hot Plate, Yamaha AG Stomp Acoustic Processor, Boss BCB-60 Pedal Board.