Through a family member, I have access to non-rev standby flights but it most certainly isn't free. Additionally, the fact you're on standby status really lowers the value of what you may or may not be getting. The net result is I've never even bothered trying to use my access to non-rev flights. Some may still think it's a great deal but that view is not universal.

With that out of the way, the offending passenger was wrong to lie about what they were doing. Also, I'm not sure why the OP's friend didn't simply ask why this non-rev passenger wouldn't switch with the person who was in the middle seat of the row he was already in. Lastly, the wronged passenger ended up in the same seat she requested from the very start.