I would be all over craigslist, if I were him. Plus just asking around. There are craigslist "helper" search engines that will let you look at a wider range of area than just DC; some good deals can be found in PA, WV and rural VA. The farther you get from DC, the better the prices can get.
Ebay does have stuff all over, but you've got to pay shipping (~$400 will get any bike shipped across country last time I looked). If you look at DC only, it can be pretty limiting.
The nice thing is that ebay has a buyer protection plan (check the details as they change from time to time) which protects you against getting stuck with a car or bike that's been subtantially misrepresented in it's ebay description.
If it were up to me, I'd counsel him to look for no older than about '99 (for reliability purposes). Lance was looking at GS500s for a while; they can be had almost new for a $2-3k, and if you go older in the low $1k range. A Suzuki SV or DL 650 could also be good choices for a bit more $.
Like you, I'd also counsel him to be willing to spend more rather than less--the diff between a $1000 barely rideable hulk and a $4000 newer bike in excellent, rideable, turnkey shape saves a lot of heartache, frustration and lost riding time (and maybe even a life) in the end.
Plus newer bikes, with better (sometimes even ABS) brakes are safer, especially for a beginning/returning rider, or those of us that don't have the reflex response time of an 18 year old any more
Just my $.02