Do you have access to a cradle? If so, perhaps that connection may be a better one and may charge the Treo. However, it sound like you may have a short of some type if the Treo "thinks" the charger is plugged in when it isn't.
Is it possible your friend upgraded to the new model because this one was acting up?
There is a guy who has an ebay site named Chris Short. He does repairs on Treos and from what I have seen he has a great reputation. You should search these boards and others and you will find some real positive reviews. I have never personally used him.
Here is a link:
http://myworld.ebay.com/itsnothere/
Take a look and see if you are interested. You can probably drop him a note to inquire about his thoughts on doing a repair and maybe he can give you a ballpark estimate.
I hope this helps,
SteveTaz