I'm not going to make any absolute statements about the fit of the bike without knowing any more than has been stated, but I will say that, fore-aft saddle position aside, the fact that the effective stem length was 50-60mm too long to begin with makes me doubt the bike is truly the correct size. If, that is, the Cinelli stem/bar was stock on the bike. Not that replacing stock stems with different lengths is uncommon; but generally, stock stems are proportionate to frame size. 50-60mm difference is huge in regard to stem length. Again, not making any absolute statements, not enough info for that.

But out of curiosity, just for general info purposes.....what's the height of your friend, and what size is the frame?

On the subject of saddle position, I think Peter White does a great job of discussing this on his site under the heading "Fitting a Bicycle." Scroll down to the sections titled "Saddle Height," "Saddle Tilt," and "Fore-Aft Saddle Position." http://www.peterwhitecycles.com/fitting.htm