Try to find out which company holds the distribution rights to the music. BMI, ASCAP, SESAC, etc are some names. If they are registered, they act as a clearing house for all rights related to millions of songs.
You can buy use rights, and recording rights from these companies for reasonable fees.
I got the rights to "Monster Mash" for $75. That covered selling under 1000 copies of the song for example, and performing it live.
Sounds like your friend went to the copyright holder directly, and someone was trying to grab as much cash as possible. There might be a correct affordable path for that song too.
Here is a page on ASCAP about Clearances http://www.ascap.com/playback/2011/01/features/limelight.aspx