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When I post proofs to my client gallery I watermark the middle image with a copyright. This is an unfortunate situation, the best you can do is learn from it and change your proofing method. You could sue, but that's not worth the friendship. Just change your future proofs to have a watermark in the MIDDLE of the image.
I have to admit though... if I *had* charged one of my friends for something like this, and they knowingly circumvented me the way this person had... I'd write them off as a piece of sh*t and that would be the end of it Again... don't put yourself in that kind of situation with people you like. I know a few people that would act like this, and of the few I know I wouldn't say I consider any of them a friend.
I went to a client / friends house for coffee the other day. As we were chatting, I noticed a horribly pixilated crappy framed image from her last session. It was a maternity shoot/family shoot with her bf's sister, husband and kid as well. When she saw me notice the picture she said, oh yeah, sister in law gave me that.
I said "I'm sorry you have such a poor quality print - SIL must have saved her screen and then cropped it. In the new year we can order you a professional print if you like." It's still upsetting me. They haven't purchased any of the images yet, even though everytime I see them they say they loved them.
How would you handle the same situation?