Your friend is right. Let $M$ be the amount of milk. At first, the percentage of milk is $\frac M{10}$.
Now we add $2$ litres of water, so the new percentage of milk is $\frac M{12}$. We are told that this is $15\%$ less than before, so
$$\frac M{12} = \frac M{10} - 0.15.$$
(This is effectively the same formula as your friend's, but personally I find it makes more sense to put $\frac M{12}$ on the left-hand side.}
As for your question #2 ("why not $\frac M{10} + \frac M{12} = 0.15$"), that formula doesn't really make sense. What's being added is _water_ (hence the denominator increasing from $10$ to $12$), not the percentage of milk.