A friend of mine has not filed his 2006 taxes and I would like to help him do that. I have a copy of the TurboTax 2006 program. Do I just go in and complete it on there and turn it in with his 2007 tax forms? Or is there something special he has to do through the IRS?

Yes, you have it right - just fill out the 2006 forms, using his 2006 data of course, and send it to the same address as the 2007 form.