I have sold several engines (Triumph, Norton & BSA) needing overhaul for $1,000 with all of the core parts serviceable.
If he's a friend, maybe offer it to him for a couple hundred less, or let him talk you down from there.
Personally, if it had it's initial run-in, and didn't have frozen pistons, I would think it would be worth significantly more, but a shrewd buyer would claim it needed to be at least partially disassembled, cleaned & re-lubed, and re-assembled before running; and, he would be justified.
author "Old Bikes"
too many bikes to list, including:
JPN, 952 Prototype, MkIII Interstate, Combat Dunstall, VR880 SS, Triton