@boomerang,
I don't think there is going to be any problems related to income tax returns or garnishment of social security benefits. I am eligible for VA benefits, and while there is both an income and asset test, I have never been audited nor asked for documentation.
Unfortunately, VA has some pretty screwy rules. I and a friend were both in the service at the same time. He was in southeast Asia; I was in southeast US and Germany. I am eligible. He is not. The reason is that I had to use there services in the late 90s, so I was enrolled in the system before the eligibility rules were changed in the Bush administration. He was not enrolled by the time of the rule change, and is therefore excluded.
In other words, your friend may or may not be eligible, and will only find out by applying. Having served in Korea, he might well qualify. If there was any kind of documented, service connected disability he will probably go right to the top. Do not let a lack of documents keep him from applying.