GAH! That's unnerving. Glad to hear that the fluid and filter changed got it moving again.
As others have said as well, I'm very curious as to where those metal bits came from. I'd be concerned that the missing bits are a sign of more to come. Who knows, maybe he'll luck out. If he likes the care, I say keep driving it, but make sure he either has AAA or his insurance offers roadside service w/ towing.
I'd also suggest to him that if he wants to keep it, he should consider watching craigslist/ebay/etc.. for a decent used trans to replace his with when it ultimately does give out. Buy it when he can get one for cheap rather than wait until he's stuck.
... and this is why I despise the term "lifetime fill" for anything automobile related. Nothing is really "lifetime fill" - maybe 100,000 miles tops - but the term leads less-informed people down the wrong path and this is what happens.
Your buddy is lucky to have received your help. If that were my car, I'd drive that car as-is for another 2000 miles or so, and then do another drain & fill on the fluid, just to make sure I got out any additional crud. If it still seemed to be in working order, I'd also swap out the pan with one that has a drain plug, or install some other method of draining the fluid.