I would start from the beginning, as others have said. It will help if he's taught voice commands too. I wouldn't canter at all, until everything else is established. May be asking for trouble.
As a 2 year, the whole ordeal of being backed and started must have been an unsavoury experience. 2 yr olds have the attention span of a small child. Its just too much mentally and physically. Your friend will need to take it very slowly, and make it a much nicer experience for him this time, or she could put him off for good.
As for the bit, I've heard alot of good about french links. Most horses seem to go well in them. Or the lozenge type. That way, it doesn't have the strong nutcracker action that a single jointed bit has. I'd also recommend the full cheek sides too, to help with steering