Yup, its totally legal...I've given a couple flight reviews (BFR's, IPC's) in aircraft types that I'd not previously flown. Obviously, you wouldnt want to go instructing anyone who also is unfamiliar with the aircraft. And before you do any flying in it whatsoever, be sure you know the systems. It could be your ass (or ticket) if something happens when you're giving instruction in it. In any case, most places you'll work won't allow you to give instruction in their aircraft without flying each specific one for insurance reasons anyways. The most common situation where you'd run into this would be doing freelance instruction, or flight reviews in customer-owned aircraft. Personally, I'd limit instructing in unfamiliar aircraft to flight reviews only, and only with owners who are familiar with the aircraft. Its a good way to get time in various aircraft though...just use common sense.
Oh yeah, and for a multiengine airplane, you must have 5 hrs. in type. But thats only for multiengine...there isn't any stipulation like that for SE.
By the way, tell your buddy to brush up on his regs...thats a pretty basic thing that instructors should know.
