Is it possible to install Ubuntu without a CD or USB drive?

Yep, all your friend needs to do is download and install Wubi. It's designed for this exact scenario. You can check it out here: http://wubi-installer.org/

If you have a USB Flash drive of 1GB or more you can use the following method.

What You Will Need

1. You'll need to download the Universal USB Installer.
2. Download your chosen Ubuntu ISO Image from Here.
3. A USB Flash Drive with 1GB or more of available free space.

The Process

1. Download the Universal USB Installer...
2. Download your Ubuntu/Linux ISO of choice.
3. Open up the Universal USB Installer program and select your Linux ISO from the list.
4. After selecting your Linux ISO select the name of the drive you wish to write the Ubuntu program to. NOTE: This process will completely remove ALL data from your drive when writing the Ubuntu Program to it so make sure it's the one you want to use!!!
5. After the process completes turn off your pc, stick in the Live USB that you just made, then turn your pc back on, and then select the USB Drive from your boot menu. After that you can either test Ubuntu on your machine or install it!
6. Enjoy your new Ubuntu installation!

If you wish to create a flash drive that is persistent (I.E. You can save stuff to it like files and settings etc...) might I suggest that you take a look at the following question and it's subsequent answers? Method to create a live USB disk (with persistence) which actually works?

Hopes this helps you out!!!

1. Use Windows 7 to shrink one of your partitions (you can shrink a mounted partition while running Windows). If you already have 4 primary partitions you'll need to remove one of them first.
2. Boot wubi and install GParted and create an extended partition in the free space you created, and then 2 logical partitions, one an ext4 partition large enough to contain your Wubi install, and optionally 1 swap partition (> size of RAM).
3. Migrate wubi to the partition, installing the grub bootloader at the same time
4. Boot the migrated Ubuntu and format the Windows partition, which you can then reuse as a separate /home or you can use the same migration script to move the migrated Ubuntu to it.

This solution doesn't require a live CD/USB (although it's always a good idea to have one.