L.K.
So, if I was in your position, I would hide in the closet when I saw them pull up in the driveway!
I had the same problem with my nephews. My sister and her husband do not believe in the word no. They also do not believe in sticking with any threats they may say to the kids... you know, like "if you do that again, we're leaving." If anyone needs Nanny 911 it is my sister!! And it sounds like your friends do too! (My sisters kids are now 8 and 5 and are still the worst behaved kids I have ever met!!)
They need to get a grip on this child ASAP before it is too late... too late to change his behavior, but even moreso, too late before he really hurts himself.
I would give them an ultimatum... either they stick to your rules in your house, or they can no longer come over. It might ruin your friendship, but it could also save your house and your peace of mind.