He is wrong on both. On question 1, you will be able to watch the HD channels, but they will not be in HD. On question 2, if I understand it right, you need to connect th the HD tv with either HDMI or component to get HD.
I had a 1000.4 installed yesterday in Lexington. E* sub for 11 years. Didn't have to fight for it. Was a little worried about the installers though, was the second one they installed.
I got one for my 722 on Nov 8. The letter said I didn't need one for my 622. I had to get a replacement 622 a couple of months ago. I opened the door on the 622 and it already had a purple card in it.
But don't they give you the SD versions of the HD channels that are available in the HD package? So he could watch those on his 510, just not the HD only channels.
( I am assuming he has a HD receiver also )