Have you checked whether sshd service is up and running properly on both the machines?
and the iptables setting of both the machines needs to be checked
You have posted the iptables output of your machine and not of the machine of your friend.
There is no issue with putty.
It is something with the sshd service
Check whether your ssh service is up and running
#ps -aux | grep sshd
Also check for port 22 whether your machine is listening or not
#netstat -nap | grep :22
Just try restarting the service
#service sshd restart
and check the connectivity to make sure both machines are in network
#ping 192.168.0.X(IP of your friends machine)
Try connecting to any other machine whether it gives the same error from both the machines.
(and all the above things needs to be checked on both machines)