Richard,
If you thought building acoustics was moving to the dark side......getting into lute building is an even darker side!!
15 pegs...15 strings. 7 double strings (courses) and a single chanterelle (top) string.
You have a choice of going for gut strings, nylgut or nylon strings. I get my lute strings from Aqullia:
http://www.aquilacorde.com/?lang=en
Be warned a set of strings for that baby is going to set you back a bit....I think I paid around $120 a set for strings for my lute. Youll also need to buy some gut frets.....you'll need a variety of gauges as neck relief on a lute is achieved by decreasing the fret height up the neck as well as the dishing of the belly.
Looking at that lute I'd say its a Renaissance lute and I'd hazard a guess that your mate made it using the CD tutorial put out by David Van Edwards:
http://www.vanedwards.co.uk/. If this is the case then the best thing you can do is get a hold of the tutorial....it's got all the building instructions and along with Lundbergs book it's one of the two best references on lute construction.
If you're doing any lute work I'd also firmly recommend you get a holds of Robert Lundberg's book:
http://www.luth.org/books/lute_book.html. I'd class this and van Edwards books/CD as essential library for any lute building/repair.