I've seen "directories" like this, and IMO this is scraping going by another name. Usually, they're not directories that listees submit to. They're scraper sites that have bots spidering your pages. Sometimes they also have blogs and wikis and apparently thriving communities, but they are using your content without permission.
I have occasionally encountered such sites that truly didn't know that what they were doing was wrong. They figured a link back to you was adequate.
Some of these fake directories allow you to go in and change the text of the listings, but often you don't know about them unless you monitor, say by Copyscape... or if you drop out of the serps.
In this particular case, where the directory listing replaces your friend's site in Google, it's likely that your friend's inbound links are pretty weak. Getting better links might bring back your friend's rankings, but it may be that the directory listing, which apparently distills your friend's content, is also better optimized.
You shouldn't have to compete with your own content, though. Have your friend complain to the directory. If all else fails, he can report it to Google as a DMCA violation. Unfortunately, this does take time and effort, and it's truly a colossal drag.