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I suspect that both routers are trying to handle your friends internet access requests. To test this, ask him to disconnect his cable modem from the network and see if he can access the internet and ping you.
If that fixes the problem, check to see if the gateway set on each of the clients.
his gateway is 192.168.1.2
your gateway is 192.168.1.1
Let us know....
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Take care,
DaleBleh    
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