Well, I've gotten one of those cease and desist letters. Actually, it came because I downloaded an older movie from the 1970s. I was an infrequent downloader and thus surprised by the letter. My ISP sent a warning notice with the RIAA statement saying that they did not send out any info to the RIAA, but if the letters from the RIAA continued they would comply if they felt their was enough reason. At that point, I cut off most of my pirate-y activities.
I don't think buying the movie really helps, unless your friend knows how to create the file from DVD to his computer and what software.
If they do press charges, I've heard settlements are somewhere between $2000-$8000, and I remember less than a year ago (I believe) a woman who did not settle was found guilty and had to pay a ridiculous amount of money.
This doesn't make sense. The RIAA is the music people, MPAA is the movie people. Perhaps your ISP was just joshing you to get you to use less bandwidth
Buying the DVD post downloading doesn't remove the fact that your committed copyright infringement.
You can only makes (and the MPAA and RIAA don't want you to be able to) digital copies of DVDs you own. You cannot download anything.
Technically you can't even do that, with the DMCA. You have fair rights to do it, but actually DOING it involves breaking the copy protection which is illegal. Lovely catch 22 and a way to eviscerate 'fair use'.