First off a natural pond will always have leaks due to nature itself. Crayfish, muskrats beavers etc. will always dig into the walls of the pond. Crayfish are by far the worse though. With that said there is never a guarantee it will be be fixed so you should tell your friend.
The biggest problem will be the tree. Once its removed I wouldn't pack rock with clay. The problem is that the rock will create to big of voids in the clay and compaction will not be tight. Use clay as well as bentonite to fill the hole. In fact if possible it would be even better to premix the two prior to filling the hole so that when water hits the mix the bentonite will swell up to give a water tight seal.
Now if you don't have a supplier of bentonite clay you can always contact a company that digs wells. They usually sell 55 pound bags of it.