When my son was 4 we moved to a new neighborhood. There was a handicapped women who walked down our street twice a day from the bus stop. She talked to herself, looking down at the ground the whole time, just muttering away. The other kids on the street teased her something awful. We found out her name was Lucy. I taught my son that some people were "different". That Lucy had handicaps, we didn't know what they were, but when we smiled at her, and said "Good Morning Lucy", she would stop, smile back, and she was a nice person. My son was never afraid of Lucy, and later, as he got bigger and more confident in the neighborhood, he stuck up for her, and would walk with her down the block.
Young kids can understand basic things about disabilities - tell them that "Billy" is "different" - he has Autism - that means that he doesn't process words that he hears or things that he sees the same way as everyone else. He communicates differently. He can be very smart about some things - but other things he really doesn't understand. So.... we have to give him a break about some things - but we have to help him learn how to do stuff. He learns differently - and more slowly. He needs our help, and our understanding. I would say, though, that if he hurts her, it IS ok to tell him that - he needs to learn limits - especially on things that hurt others. So, no pinching, pulling on people, pulling hair, etc. It's ok to say "no" or "please don't do that" - really.
Most kids are pretty cool - once they understand. My son had an autistic boy in his class in 6th grade, and the other kids all kind of ganged together to "help Connor" whenever appropriate. Connor had his own way of doing a number of different things. He was very much a part of the class.
I'm so glad to hear that you are including your friend's child in your life. I'm sure that you will all be enriched by the experiences.