make/become friends. 成为朋友，交朋友。 Since we were friends
"Since" can mean "既然" (as) or "自从" (from the time) 

"Since we are friends" is not translated as "自从我们是朋友". It is translated as "既然我们是朋友" (as we are friends).

"Since the time we were friends" is translated as "自从我们是朋友那時候起"

Your teacher is correct, "自从我们(是)朋友" is problematic because the verb "是" (is) doesn't has the meaning of "become"

"Since we'd became friends" should be translated as "自从我们交上了朋友" or "自从我们成为了朋友" (Since the time we'd became friends)