Yea, anytime you cancel an itinerary mid way through like this the only way you get any kind of credit is is through repricing the flown segments at today's prices.
So if his ORD-STI-DSM ticket was $500 and he drops the ORD-DSM segment from the end, the itinerary would be repriced to ORD-STI-ORD at today's prices, if this was less than the $500 then there would be residual value left on the ticket (not sure if they would actually issue a trip credit), but if this was more than $500 then he would have to pay the difference to drop that segment.
Side note, but it's ridiculous they wouldn't check his bag just to ORD given the overnight connection. Definitely ask again in MIA, I've never had a problem with this the few times I've needed to.
And for #3, if he cancels the rest of his itinerary while in the air from MIA-ORD then I'd say it's 50/50 on whether the bag gets offloaded at ORD or continues to DSM. I'm not sure how quickly or often the baggage system talks to the ticketing system in a case like this.