Is this possible? Prevent Live-Linux from booting and grabbing your files without encrypting your disc?
Your friend has no idea what he's talking about. You don't even need to use a Linux disc - you can use single user mode or a Mac OS X install disc to copy things or make changes to the filesystem.

To prevent someone from booting into single user mode or from an unauthorized disc or external drive, your friend can set a firmware password. However, this, too, is easily bypassed if you can open the computer and remove the drive, or alter the memory configuration. Simply put, if someone has physical access to a computer, encryption is the only way to protect your data.