Since 90%+ of the trucks out on the road have IFS, and you don't have real hard-core intentions for it as a 4x4, I'd suggest just looking to swap with an IFS truck. As I mentioned before, I'd bet you coudl get a whole truck to sere as the donor for your $500. Yes, you'll need some help/extra $$ for welding, fab, etc - but I'm skeptical it would all be as much as the 2500 suggested above, IF you can get a single donor truck whic hyou can take evrything off of ANd use as a template. Where it gets expensive is paying $150 for tis, $300 for that, $50 here and there, etc etc... it stacks up fast.

Here is another idea...
Do you have the space/facilities to have 2 trucks? It sounds like this 4x2 would be a great daily driver. Why not simply rely on it for everyday gettin garound, and take the $$ you have in pockets and look for a trail "beater" rig? Vehicle #2 does not have to be pretty, comfy, or even an, er, reliabile b/c you will always have another way to get to work. AKA you can spend less $$ on it initially. Then, you can work on it slowly over weekends and such - use this as your chance to learn the mechanical stuff at your own pace and w/o havin gto worry about walking/hitching a ride to work when some repair dosn't go so smoothly... which WILL happen...
Also thsi will keep this cool wit hyour buddy, he wil lappreciate your interest in his hard work on this truck, and surely understand that is simply does not fit all your needs.