I would think that the most easy way would be the most probable?
So your friend might have a keylogger, or somebody (he might know) guessed his secret question and used it to change his password.
So I would start with changing that if he can and checking for possible malware on his pc.
*I will presume you use Windows*
Now for tracing you would have to try and see if he'll send you an email, when he does that you can take apart the email header and find his ip there(google email headers if he does mail you and figure out how to do it lol) Or get some sort of a connection with his computer, like ICQ chat would show his ip when you type "netstat -n" in command prompt (Like type it before talking to him, then do it while talking, the ip that got added will be his) or on msn for example, but this would only work if he'd be foolish enough to send you a file (or accept one from you) when sending a file, a connection between your pc and his will be opened
Anyway once you did that use a tracing program to see where his ip is located (not 100% accurately of course).
But I don't know any right now for Windows and it's bout time for me to sleep so gl lol.
Don't think the cops would do much about it, try to just recover your friends account(s). Maybe scare off the guy/skiddie that took over his account(s)?
Btw @3nIGhost No offense but taking over somebody's myspace is in my opinion not hacking, but more of a pathetic cry for attention lol?