The oxygen level of 100% is meaningless when a person is receiving supplemental oxygen. It may, but almost certainly does not reflect his oxygen level when he is out of the hospital and in a steady state. That is the oxygen level that counts.
Red blood cells carry oxygen. When all the red cells in your body are carrying the maximum amount of oxygen they are capable of carrying – that is 100%. Nobody, not taking oxygen, walks around at 100%. Even if your friend's oxygen level were in the normal range, when not in the hospital, that would not be evidence of minimal or no lung damage. By the time the oxygen level falls below normal, that person has usually lost 50 to 75% lung power.
It is crazy for him to conclude that this information means there is no damage. He should quit smoking now.