Jim K is right. That is someone's novelty item.
The good news is that the barrel looks to be at least 16" long, which means you could shoot it with a shoulder stock and BATF can't do anything about it.
Regarding ammo, the original ammo for the Luger carbines was significantly hotter than standard ammo to ensure proper operation of the recoil operated action. Due to this, an auxiliary recoil spring was included inside the wooden forearm.
As far as selling it, let your father's friend try to sell it on his own. Perhaps then he will learn the realities of "the market." (However, you never know; There may be somone stupid enough to pay $1000.00 for it.)