If I right click on their contact card it opens the new card window. If I then click the little back to back arrows on the bottom right of the card it flips the card over. I can then see his name, email address and then at the bottom it says Windows Live Contacts with a check box. If I tick the box it comes up with status pending. He gets the same on his PC.
If I try to start a conversation with him it just says that he's offline.