Your friend is wrong; the Bible clearly teaches that God is good, and evil doesn't come from God but from Satan. (He may have used an older Bible translation, which occasionally used the English word "evil" to translate the original Hebrew word for "disaster" or "judgment.")
Perhaps you've heard people say that you can prove anything from the Bible if you try hard enough. And sometimes it seems like they're right; you can distort something in the Bible so severely that you end up thinking it says the opposite of what it really says. And that's exactly what your friend has done; he's tried to make the Bible say something it doesn't really say. But the Bible warns us not to do this: "Woe to those who call evil good and good evil, who put darkness for light and light for darkness" (Isaiah 5:20).
How should you react to your friend? First, don't listen to his arguments or let them influence you. From what you say, he isn't interested in the truth; he only wants to stay in his unbelief. Instead, ask God to show you the truth as you seek Him and open your heart to Jesus Christ. Jesus said that when we give our lives to Him, "You will know the truth, and the truth will set you free" (John 8:32).
Then pray that God will use you to point your friend to Jesus. The greatest act of love we can show to anyone is to tell them about Christ.