The Bible doesn't answer all our questions about evil; in fact, it calls evil a mystery or secret that God hasn't chosen to reveal to us (see 2 Thessalonians 2:7). Someday in heaven we'll understand where evil came from and why God allowed it to exist -- but not yet.
But the Bible does reveal two important truths about where evil comes from. First (as your friend suggests), evil comes from the Evil One -- that is, from Satan. Don't think of Satan as a cute cartoon character dancing around with a pitchfork and a red suit. Satan is a powerful spiritual being who is absolutely opposed to God, and is far stronger than most of us realize. He isn't equal with God, but is totally evil, and repeatedly works against God. Jesus called him "a murderer from the beginning.... a liar and the father of lies" (John 8:44).
Second, the Bible tells us that evil also comes from within our own hearts and minds (as you suggest). Satan is responsible for the evil in the world, but so are we. Jesus said, "For from within, out of men's hearts, come evil thoughts, sexual immorality, theft, murder, adultery, greed, malice, deceit, lewdness, envy, slander, arrogance and folly" (Mark 7:21-22).
Someday, Satan and all his forces will be defeated, and Christ will reign forever. But today Christ already can defeat the evil in our own hearts and minds -- and He will, as we yield our lives to Him. Is this happening in your life?