As noted, Windows Live Movie Maker cannot open project files from the XP version of Movie Maker.
There isn't much you can do with a project file anyway. A project file is like a recipe that says, take 30 seconds from this clip, transition to this photo, add a title, etc. But a project isn't any good without the source files (video, music and photos)
that were used.
What your buddy should do, if he wants you to be able to see the movie is to save it as a movie file (File > Save Movie) and that will create a .wmv file that you can play on other versions of Windows.
If on the other hand, you are trying to edit his project, you would need all the source files and a
compatible version of Movie Maker.