Time for hats.
I worked with a good friend of mine for a long time. At one point he was my manager, and at another I was his. Some people suggest that they can't co-exist but the fact is that they can. It's easy, as long as both parties can be grown up about it. Thus it's time for hats.
Start the conversation, "Hey Bill, I have to put my manager hat on here for a moment. I need ... manager stuff ..." As long as your in manager mode, then do manager stuff, talk about business, and stay focused.
Then, "... so next week at the latest. Back in friend mode, how Jill doing, are the kids still having a hard time in math class? ... Friend stuff..."
The important thing to understand and make understood, is that "this conversation" is Friend mode, or work mode. Then never ever cross those lines. If you know as a friend that Bill is having a hard time at home, you don't use that with your manager hat until he brings it up. You can use friend mode to suggest that he speak to you in manager mode, but keep friend stuff isolated from work stuff. If you need to, always have your manager conversations "in your office" and let everywhere else be friend mode. Even if it means stopping a conversation. "Hey manager, I was thinking about taking next Tuesday off..." -- "Stop right there, that a manager hat conversation, lets go to the office." -- "Now you were saying something about time off?"
As a friend he needs to be able to say, "Man I am having a really hard time focusing at work, what do you do to stay focused?" and get a friend answer without it showing up on a performance review.
In work mode you need to be able to say "Your doing a crap job, fix it (well the real version anyway)" without it effecting your plans later that evening.