I don't think "Unknown Sources" would make him not be able to download from the market, it allows installing from outside the market in addition to things from the market.
Try going to Menu>Settings>Applications>Manage Applications>Market & then "Clear Data". It will just make you accept the terms of the market again, but won't lose any of your downloads. I find that usually fixes any problems I have when I'm not able to download something from the Market.
Edit: Nevermind...I just reread the original post and am an idiot who didn't read it correctly the first time. Haha!
Yes, make sure "unknown sources" is selected.