In my knowledge, a Designated Marksman fills the role of sniper or long-range marksman in a squad format, when a true sniper would not be present. It's usually to give the squad some long-range capability, and it helps with balancing out the squad or fireteam. So, yes, your friend was wrong.
Guns, guns, guns. As M14 said, any kind of long-barreled rifle will work. M16, M14, G3, M14 EBR, SR-25, etc.
Here's (from Wikipedia) what they say:
"The DM's role is to supply rapid accurate fire on enemy targets at ranges up to 800 metres (870 yd) with a highly-accurate semi-automatic rifle equipped with a telescopic sight. Like snipers, DM's are trained in quick and precise shooting, but unlike the more specialized "true" sniper, they are also intended to lay down accurate rapid fire."
Hope this helps, and feel free to correct me on anything (Jarhead we need you!).