Your friend needs to call both eBay and PayPal ASAP.
eBay 866.442.3229
PayPal 888.221.1161
PayPal does have buyer protection if the item was eligable - it must have been shipped to a PayPal verified address and he needs tracking info on the shipment. If he shipped via FedEx, DSL or UPS (basically anyone but USPS) call them first and have the shipment stopped and returned - they will have no problem doing this.
You said he got an email saying the $$ had been taken out of his account. PayPal can find where it went. Will it still be there? Probably not but they may be liable for the lost money. It also maybe be possible if his account was hacked that the person who won and paid for his ebay auction was not the one that took the $$$.
To report unauthorized use of your PayPal account go here while you are on the phone with them (might be a few mins hold and you can fill this out)
https://www.paypal.com/ewf/f=sa_unauth.
If he has any other questions I'd be happy to answer them if I can.
ICQ 331-081-715