First of all... I don't know why some people here are mocking OP's friend because he shared this problem with him... maybe its the OP himself, his/her family member or actually his friend is facing this problem... who knows... judge the situation not the OP...
Now, Personally... OP if you want a genuine answer then you need to judge this situation from the mindset of a young virgin man who never had a romantic relationship or any kind of sexual contact with a woman in his life before...
The act committed by this girl (not the premarital sex, but her confession to her husband after marriage) is an act of betrayal and a breach of trust... Now, she is even trying to blackmail him to forgive and forget about her past... As per the OP's words, the girl confessed to her husband after the marriage knowing that he is a virgin and never involved himself in such relationships... Why would she even want to confess to her husband in the first place... Lets examine some of the possibilities... maybe she feels really guilty now and wants to repent but what happened to that guilt when her husband gave her his trust when he agreed to marry her with the intention that he feels that she is compatible with him and believes that she herself is a virgin too... Or maybe she wanted to confess because later in their married life, he could have found out otherwise that she had a premarital relationship with someone and then she would not be able to justify her situation if he chose to react with an emotional outburst...
Now, as the OP is telling, the marriage is done within the family... Hence, now the wedding done and the family is settled with the matter... The girl has seeked the perfect opportunity to get rid of this ugly secret and guilt of her past without having to go through the possibility of a divorce....
The girl is trying to target the nature of OP's friend, as the OP is saying that his friend is naive and doesn't know what he should do about this... The girl is probably thinking that "Since we are now married and all that stuff and I know you are such a naive, shareef and a chicken... You probably wouldn't dare to divorce me because of all the social and family pressures in our desi culture, plus 'Log kya keheingein?' Khandaan toot jaye ga' etc... so I expect you to accept and live with my past"... now she is putting this pressure on him to 'forgive her' and 'respect her honesty'....
If the girl had good intentions to repent... then you should have told him about this before their marriage unless he had such a past of his own as well which he does not... So, that even if the guy wanted to reject her... they could mutually decide upon some fake excuses to present to their elders about why they are not compatible for each other etc etc..... and they could have easily moved on with their lives...
Personally, if this would have happened with me... I would divorce her... I am a virgin and I intent to stay virgin until marriage... and I believe that a virgin man has every right to demand a virgin bride for himself unless he chose not to for whatever reason...
So, for the sake of an argument... lets suppose that this situation occurs with me and a lot of people here are suggesting to forgive and move on... and I do that, but how will I able to get intimate with her? I think I won't even be able to consummate the marriage with such a women, I would feel very inadequate knowing that she has already experienced all of this and I trusted her with her virginity...
She already knows what to expect and how it feels whereas I don't and I will definitely know that she will either consciously or sub-consciously try to compare my performance with that of her previous lover... which I find extremely disgusting to even think about it...
I completely agree with Ozair and like his mindset. A chaste woman for a chaste man. God says that too.
If the guy cannot seem to forget then its best he divorces her. HE doesn't deserve someone like her. Sorry but that's my opinion. She should have told him before nikah and baat pakki that she was a non virgin and has had previous relationships. It is true that in our desi and Islamic culture, when an arrange marriage takes place, the bride is expected to be a virgin. (even the groom should be one, islamically)
Those who say that the girl has been through a lot emotionally- Yes I agree to that but if a girl is old enough to sleep with a guy and also get married, she should be mature enough to know the effects of her actions.
Yes, Allah is forgiving, but for the guy who never has had any past sexual relationships, it is extremely hard to get the thought of it out of his head.