I don't think you're a horrible friend. I always had the same problem where if I see something I don't think is right, I'm compelled to fix it. But I have to remind myself that other people, even my friends, aren't my responsibility. I can only control myself and my actions.

There are times when I find it easy to step in and lend a hand. Other times, it's just not fitting. I can't decide which case yours relates to, because I'm not in your shoes.

It's possible his new crowd has more influence over him than you would. In that case, it's likely that if you confronted him about things, he'd meet your opinion with some dispute. But if he values your friendship, like he apparently says he does every once in a while, maybe just giving some advice would be appreciated.

Bottom line, you're not a horrible friend. It's obvious you care about him as a person and your empathy is causing you grief. Even if this guy doesn't know it, he's very lucky to have someone thinking about him like you are.