Converting a clean 2wd to a 4x4 is really waste of time, money, and a good vehicle. Also since you are a newbie, the end product of this conversion would be way beyond your current skill level. To your $550, you would need to add a rear axle, install a x-member(2wd frames are different so it isn't a bolt on procedure), front and rear lift springs, an SAS kit, X-over steering or Hi-steer, rims and tires, gear change, plus the cost of welding required for the SAS x-member and spring hangers, figure an easy $2500 more.

Since this is a clean vehicle and you want a 4x4 for a daily driver and weekend outings, yoiu would be better off selling the 2wd and buying a 4x4. Here in CA a '91 clean 2wd X-cab can bring anywhere from $2500-4000. Depending on your area you should be able to pick up a 2nd gen('84-'88) stock 4x4 or a 3rd gen ('89-'94) 4x4 in need of repairs for the same amount, putting you well ahead of converting a 2wd to 4wd.

I think your buddy would also be a whole lot happier to see you sell something he took good care of, over hacking it up and turning it into a 4x4.

Another option would be to keep it and drive it while you look for a 4x4 in need of repairs. I have picked up 2nd gens for as little as $350 in running condition, only needing a good cleaning and tune-up, check craigslist.com for your region, you can usually find good deals there.

There is another way to keep the 2wd and build it so that you can use it for weekend outings, turn it into a pre-runner. You could put a 2wd lift on it run some 31's, drop an ARB and gears and be off. The lift/tires would give you more ground clearance and the rear locker would give you the added traction you need off-road. Toyota actually offered a 1st gen Tacoma like this a few years back