I was wondering server populations too. I remember XI allowing you to view current populations on your server when logged in. I'm on a fairly crowded server atm and so far I haven't had any problems logging in at peak hours so I'm not sure if there's necessarily a cap to how many existing characters can be logged on at one time, I think the cap is just for creating new characters or transferring onto the server during that timeframe. I've only been playing for a couple weeks so I'm just going off of what I've observed and I could be wrong.

Is your friend already on your server, or is he trying to transfer in from a different server?