I feel for you and your friend, I had a similar experience in Warhammer Online, got banned in one of their Banhammers and they never would reinstate my account. They never did say why, I have never used a bot or overlay in my life. Probably for the best, the game wasn't that good anyway. To your post though, no matter if your friend reported the bug or not, he still actively cheated in game, it doesn't matter if he used the items or gil. Your friend does not work for SE, he was not asked to test for these kinds of things, he did not have any special ToS. There is an old saying "curiosity killed the cat", and well in this case it seems appropriate. I do not see them lifting the ban anytime. I will say that no matter what, in the amount of time you have spent fighting the "good" fight he probably could have had 3 or 4 more toons to 50 and been running Coil and other EG content with you. I wish you the best of luck but you should really tell your friend to play the game as intended instead of trying to find bugs. Remember that running across one is different then actually trying to find one.