A friend of mine recently bought a electric guitar, but he doesn't got an amp. Therefore I wonder if there is any virtual amps available (He plugged the guitar straight into the computer through the microphone plug, and got sound) for effects, like distortion.
Amplitube. Better have a good sound card.
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Electric - you plug it into a power outlet in the wall and the music comes from little speakers in the guitar.

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If you get a Line 6 TonePort thing, it comes with some software so you can record and use your computer for an amp i think.
I know this is useless, but my god does that bring me back.

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Yep, you don't want to plug it in to the mic input or you get crappy sound. You need a card or an external box with an unbalanced instrument input. M-Audio makes a lot of good stuff like that... find something in his price range. (but I'm guessing he doesn't have a budget... or he would have an amp)

There's a lot of amp modeling software available out there. I've used Amplitube and its alright. You could do this now without buying a good sound device... and save up for the device later.
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theres something called freeamp that is pretty good, try googling it.

+1. Freeamp 2 is amazing.
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Cheap amps are "that bad". They suck up your tone like cocaine at Kate Moss' party.

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try the V-amp 1 or 2( rackmountable possible)

you can get a bunch a crazy sounds pretty cool
he d be best off with something like a toneport from line 6 or if hes willing to spend some money theres this one for about 250( or maybe even 350) thats pretty cool and comes with an expression pedal and 4 stomp pads to turn off/on effects as you would with an actual rig
too much to list

Soldering iron:15 dollars
Amp kit: 500 dollars
solder: 5 dollars
Burning the crap outta your fingers: priceless
Try out Guitar Rig. No need for a rig kontrol (which looks totally sweet anyways) Plug straight into the mic and you're jammin.