Just wanted to close this one out with a most interesting diagnosis. My friend took it to his mechanic and his mechanic checked everything on the motor and outdrive. The problem was a bad distributor. The loud bang he heard must have been something breaking inside the distributor, but there was no other damage or problem inside the motor or outdrive. His mechanic replaced the distributor, checked everything else and said that the motor and outdrive are functioning great now, as everything should. Thanks again for the replies and have a safe summer!
