One of James Madison's fears about the Constitution was, he knew that over time, the meaning of words changed.
To the men of his time "well regulated" simply meant well trained, or, well disciplined.
I think your friend is confusing period usage of the term regulated
with the modern terms "administrated, controlled, governed or ruled
Regulation in that sense was used in the same way as we currently "regulate" double-barreled shotguns so that both bores print in the same target area. It had nothing to do with how the militia was governed or controlled, but how uniformly they were equipped & trained. There were standards suggested for the type of bore & its shooting prowess involved in the language of the times that support the period usage of "regulated" as a technical, not administrative term.
Language & its usage changes over time as well, as has been pointed out. For example when King William III first saw Sir Christoper Wrens architecture, decorations & painted murals in St Paul's Cathedral he said they were "Awfull & Artificial
". At the time that was a great compliment because it meant "Awe-inspiring
" & "Full of art
", almost the exact opposite of current usage of the same words.