It's not that rare - not even in conjunction with 'friend'.Yes. Or else (far more likely) he doesn't know the correct meaning of the word. It is very rare.
Argentina, perhaps your friend meant esteemed.So after the meeting, I asked the gentleman what he meant by that description, "erstwhile board." ..."I think you meant 'esteemed' board, didn't you," I suggested helpfully. You know, the way senators call each other "my esteemed colleague" when they really mean "the dirty, low-down rat who voted against my pork barrel bill."
Since then, I've heard many other people use the word "erstwhile" when I'm sure they meant "esteemed," sometimes sincerely, sometimes sarcastically.