Did friend know about the inheritance? Seems interesting that the amount he wanted to borrow and the amount your DH received were identical.

If he really is getting a settlement, then there are companies that will give you money up front for expected settlements.

If you didn't use that money to redo gutters/wiring...when would you? Would their be damage/fire hazards if you didn't?

If he didn't pay you back, how would you feel? Would the friendship be lost? Would it be lost if you didn't give him money?
if you are going to lose the friendship anyway, why not keep the $5K?

Two thoughts.
First, someone looking for money will review their options from most convenient to least convenient. When you're asked by someone in a hard position, it may feel like you're the difference between their chance to succeed and their chance to fail. But you're really just the next stop on the list...there was an easier one before you and there will be a harder one after you.

Second, "What appears to be a crisis is often the end of the illusion that things were working." It's rare that someone is actually in a situation where they were OK before and they'll be OK after, if they can just resolve one immediate issue.

Has he applied for social security/disability?

If you have decided, what did you decide?