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Hello and welcome to BBB! I believe if someone deletes their account, they will still show on your buddy list, but never online. If you got a response that the email was no longer valid that very well may be, but I know with some email providers you will get a similar response if the mailbox is just full.
You may wish to try and contact your friend by another means just to verify if you are able. If not, I'd give it another shot and just be sure you get the same responses in a week or so.
If so, you can remove him from your contact list and email address book from within the address book itself. That is the most reliable way to do it at this time. It does not automatically delete anything from your contact list or address book. That's actually a good thing - you may have phone numbers, or other information stored there and if it automatically deleted then you would lose the other valuable information. It is up to you to go through and clean out contacts you no longer want to keep.
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