sooo should I tell him to just wait? also, does it ban updates too or just multiplayer?
It's really up to him if he want's to do it or not, just give him the facts.
He could always do what I do, now my first 360 is banned I own 2, I play backups on the banned system and go on LIVE with original games on my new 360. You just switch the harddrive between the consoles to keep using the same profile. But that's not exactly the cheapest option!
If your Xbox360 gets banned from LIVE then you are banned from EVERYTHING, you cannot connect to the internet service.
This includes multiplayer, game updates, Arcade Games, demos, everything...