I can't comment on the replacement, but in terms of finding the passport, is it really with the parents? My baby brother had a similar situation, had a flat in London, but most things, including passport were (supposedly) at home with the parents. Prior to a work trip (I want to say day before) he rocked up to pick up his passport, only to find it not in the desk (passports live in a very specific place in my mother's antique desk). Cue tearing the place apart, much swearing and blaming. Ended with my mother driving him to his London flat (several hours away) and in about 5 minutes locating the passport in the flat.

If he (I am making assumptions here clearly) lives with his parents, then that limits where it could be. But popular places for them turning up is inside old travel / handbag / laptop bags (especially inner pockets), inside envelopes / plastic wallets containing travel documents or other documents where you may have used the passport as proof of identity (new bank account, driving licence application etc), fallen down the back of an overflowing drawer, inside another document (e.g. all the family passports stacked together), near the washing machine (as you empty out your travel bag after a trip), in filing cabinets, underneath or near a computer keyboard (when you enter the passport number in an online booking), or inside jacket pockets of coats you rarely wear. Things are rarely lost, lost, more misplaced, so have your friend and parents be very systematical in their search and it will probably turn up.