It really depends on what kind of petition it was and whether their priority date is current. You didn't say whether your friend is a USC or a PR. You also didn't say whether his wife is in the US or not.
If he is a USC, then yes, they can proceed with the rest of the paperwork - whether it's through CP or AOS.
If she is in the US and he was already a USC, they could have filed everything at the beginning.
(Edit - btn posted just as I was composing, hence the duplication in the answers)