I think youre overestimating the cost of an upgrade.
AM2 Athlon is relatively new & in my opinion sucks as you lose 1 IDE socket. I'd suggest to you to look on ebay for a 2nd hand socket 939 Athlon 64 board & chip. If youre already using DDR brilliant as it will work in any 939 board but if youre using SDRAM then there are boards available that take both types of memory. This will slow up your immediate costs as you can then upgrade the ram as & when youve managed to save up for it. I'd guess you could get from ebay a sock939 athlon64 3500+ & a good board in the region of around £100 or less.
If your friend cant boot from IDE on his new board then hes not set his bios up correctly. SATA is not forced upon you even on AM2 although its the direction to go in if youre replacing drives. Buy SATA2. If youve never tried 2x SATA2 300 drives in RAID stripe then you wont understand how incredibly fast they are, but if you buy any sock 939 nforce 4 chipset board there will be at least 4, maybe 8 sata sockets on the board along with the standard 2 IDE.
One other thing to take into consideration when you buy the board.. PCI-Express or AGP Gfx cards.