Nothing has to be "wrong with her" for him to not be interested in dating her. He can just say he's not infatuated and interested in her in more than anything than a friend.
I have plenty of friends who are girls. All are very pretty, very nice, and very smart. But I'm not attracted to any of them and I would never date them. They are my friends. It's simple really, and your friend should have no trouble turning her down. If the mental spark between the two people and the physical conncetion aren't there, then no interest will be created. It's as simple as that.








