A friend sold some investment real property this year and had a large long term capital gain. He invested the proceeds in the market and the values are down. If he sells the investments now he will have some short term capital losses. Can he use the STCL to offset the LTCG? He also paid estimated taxes on the LTCG so if he can use the STCL to offset the LTCG, he should be able to get some relief from the estimated taxes he paid earlier this year... correct?

Yes, ST losses can offset LT gains, but to be clear - first any ST losses are used to offset ST gains, and LT losses are used to offset LT gains. If he has excess ST losses (ST loss exceeds ST gain), then the remainder is used to offset any remaining LT gains. If the total of ST +LT losses exceeds his LT+ST gains, then he can offset ordinary income up to a max of $3K. If his net losses are greater than $3K, he would carry over the excess into next year.

Regarding your question about getting "relief" from the estimated taxes - when he does his taxes and files next April if it turns out that the estimated taxes he paid are more than his final tax bill, he can either get a refund or credit it towards his 2009 tax bill. There's no way prior to filing his tax return to get a refund of estimated taxes already paid.