Is he right to think he doesn't need to have it turned on if he shoots RAW? Or is he right to always have it set to on? :shrug:
There are two types of in-camera noise reduction: Long exposure noise reduction and High ISO noise reduction.
Long exposure noise reduction only affects long exposures. On my Canon 40D it cuts in for exposures of 1 second or longer, and on my Nikon D90 it only affects exposures of 8 seconds or longer. I imagine your camera is probably similar. So if you're not shooting long exposures, it makes no difference what settings you have.
High ISO noise reduction only affects shots taken at high ISO settings. On the Canon 40D the threshold is ISO 800; on the Nikon D90 it's "Hi 0.3" (ISO 4000). So if you're not shooting at high ISO values, it makes no difference what settings you have.
But if you have LENR and/or HINR switched on and the camera decides to use it on any given exposure, then it affects the image regardless of whether you're shooting RAW or JPEG.
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