This is also a developmental stage thing, that kids at this age revisit some of the issues of age six re: "if you're playing [hanging out] with someone else, you're not my friend."
Sozlet had major issues with that early this year with her BFF, Kay. Kay's default mode is sweet and laid-back but things got pretty bad. So I can imagine it getting REALLY bad if it got that bad with Kay.
Sounds like Mo is handling it well, especially the extra condition of making N apologize to you guys. I like that on two levels. (Thoughtful of Mo, and also a good way to keep N at arm's length -- I could see that N really wouldn't want to apologize to you guys.)
Hope that solves the problem....