This is an all too common problem. Exactly what is happening is hard to say. Exactly what goes on in those furry little heads is hard to say. Could you be convinced he is doing it deliberately to protest being crated? If so, it certainly is effective isn't it? Many ''experts'' say no way. My thinking is moving toward it being stress.
I think the first step is to eliminate the bedding. You might try wood shaving instead. If you do, let me know how it works. Racks do well with small puppies and urine, but often stools stay on top.
Having a good pack structure reduces such problems. The dogs see all the
people and dogs in the household as a pack with each having their own rank in
the pack and a top dog. Life is much easier if the 2 legged pack members
outrank the 4 legged ones. You can learn to play the role of top dog by
reading some books or going to a good obedience class. A good obedience class
or book is about you being top dog, not about rewarding standard commands with
a treat. Start at
http://www.dogsbestfriend.com/
Don't just put him out for a little while before bedtime. Make sure he moves around enough to stimulate his body enough he voids himself. Even a tiring game of fetch would be good.
A smaller crate makes a big difference with some dogs. It only needs to be big enough for him to stretch out. You can block off part of a larger crate.
Your friend could also try the peanut butter filled Kong.
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