The fact that his monitor's native res is 1920x1080 means that his panel can display 1080p, or 1920x1080 with a 60Hz refresh rate. That does not automatically mean however, that his tv will accept and process 1080p signals. You seem to forget that his tv's specifications specifically state support for up to 1080i, not 1080p. People have been making the same mistake with the new 37" Philips 37PF9731D/10, or the older Sony Qualia 004 projector. The panel might support 1080p, the other parts don't. Most tv's with 1920x1080 panels released in 2006 should support 1080p input though.
I hope this clears a few things up.

I believe you are a little confused on the subject. No, his monitor cannot accept 1080p over component, and that is what it is referring to when it states the other progressive and interlace resolutions (component only). His monitor does accept 1080p via VGA. Just ask him to try a 1080p video feed from his pc to his monitor via vga, and i bet you that it will work. The problem is how the 360 send out 1080p, and not his monitors accepting vga 1080p.