You gotta pull the head to confirm. That lifter may need to be replaced. Was the car running beforehand? Unless we can get a look at the head surface, I would say the head may be still good, but the bore for the lifter may need to be checked. Have your friend remove the head, take the cam out and see if he can remove the bad lifter. The valves for sure will need to be replaced - also check the guides and seals.
Is it doing that with only this valve? I'd pull the cam and see if the valve springs aren't broken first.
From what I see, all looks good. Get that one valve fixed and put on a 1.9 HG and new timing belt. You should be fine.