Where angels fear to tread!
I would start by making sure you and your Muslim friend agree on the concept of “holy.” Muslims tend to have a stronger sense of this than many westerners these days, so its a good place to begin. What is the source of all holiness? God.
What is the measure of holiness? Perhaps you can agree that the measure of holiness is the degree to which a thing is “touched” by God.
We can speak of holy ground, like St. Peter’s or Mecca, for your friend. Why are those places holy? Because God has touched them. We can even speak in terms of a holy city, like Jerusalem, knowing that not all of the city is as holy as the Sepulchre, or the Dome of the Rock. So there are degrees of holiness that are related to the closeness of God to the thing in question.
Next, perhaps you could move on to a more personal example. If God can make a church or mosque holy, he can make othere things holy. For example, he can make a book holy. The best example for your friend will be the Koran. It is holy because it is God’s word. God the makes the Koran holy. Your friend may even agree that Mohammed was holy because he heard the word of God. Mohammed was like a “speaking book,” and because he spoke the word of God, he was holy.
With this shared understanding, you may begin to explain how Christians apply these understandings to Christ. Start with the incarnation and move forward, because this may be the easiest part for your friend. Christ is a man whose humanity was “touched” in a totally unique way. Christ’s humanity is so touched and infused by the Father, that his holiness is virtually the same as the father’s. This will be similar to the closeness that your friend believes Mohammed experienced he spoke the word of God: Mohammed speaking, but God’s word. Mohammed became the voice, or book, of God. With Christ, we also perceive his words to be totally holy, the words of the Father, but also believe his whole being, His soul, to share the holiness of the Father.
That is where I would begin, but I would take the thing slowly.