‘it’ is the third person singular pronoun.....‘this’ is a demonstrative pronoun. The word ‘this’ is used as a demonstrative pronoun whereas the word ‘it’ is used as a personal pronoun. The word ‘it’ is normally used to begin sentences that lay emphasis on a subject or an idea as in the sentence, as in...."It is important to follow the rules and regulations". In this sentence the word ‘it’ is used in the sense of laying emphasis on an idea............On the other hand the demonstrative pronoun is used to refer something to somebody "This is the book I mentioned to you". In this sentence the word ‘this’ is used in a bid to demonstrate or introduce the book to someone by somebody.

I think you friend misled you in saying that one is correct and the other is not. Basically, it's the difference between "this is" and "it is".