We've all had that friend -- the real-world model citizen who ninja loots a purple and gets gkicked from your guild, leaving you to deal with your game community while trying to find out what came over your RL buddy.
I was in a similar situation many years ago. A friend of mine joined our raiding guild. He was a nice guy, but in game, he frequently taunted others, even on Vent. He openly told others to ignore the guild leader's wife during raids because she wasn't the raid leader (though she was a class lead and usually ended up leading the raid when the guild leader was dealing with loot). When I tried telling him that his actions didn't seem like him and that he was doing things that undermined our guild structure, he simply said, "It's a game. These people aren't real."
Suffice to say, I don't play with him any more, but I also don't talk to him in real life anymore. He was kicked from the guild, and then he and asked me to leave. I told him that while he was a good friend in real life, I felt that the way he acted in game didn't match up to who I saw him as, and I told him I'd like to keep our friendship based in reality. Didn't hear much from him after that.
Have you had a friend who turned into an online jerk? What happened? Were you able to save the friendship, or did in-game drama lead to real-world problems?