The kids next door had this problem. Someone eventually gleaned password information from her and changed her account details so that she couldn't log onto MSN. They then changed her information and stated she was pregnant and on drugs. That would be "funny" if the person concerned was over 12
It annoyes me when this happens it really does. But as you probably know one of the first things you do on MSN is invite people you know only into chat. You never ever give out personal details to those you don't know, however innocent the information required might be. So as you said the way to stop this happening is to vet people you don't want to talk to.
The upshot was we contacted MSN abuse who at the time were next to useless and asked them to check and block whoever was using this childs account. It took a while but they did take action and we were able to find out who had invaded her account.
I would advice your friend to look at the MSN abuse pages and contact them directly with the log ONLY to start with. they wil then get in contact with you to ask for ip address and other information. Its a long process but worth doing.
SeTi^