Sound like your mates been stitched up a bit. Certainly when I was instructing, for Element E (on road part) the ratio was two trainees to one instructor. But did your mate miss other Elements (B or C) because he couldn't find his key? Sounds like it was found later in his glove before the road ride.
The instructors should have told the trainees BEFORE the CBT had started that they didn't have enough instructors for the road ride and negotiated for one of them (probably the less competent one after other Elements A, B, C, D had been done) that they would have to come back on a separate day to complete Element E ... This is regardless of whether the key was lost then found or otherwise.
Sound like they wangled out of that because your mate mislaid his key. As far as I'm aware most training schools offer a second day free of charge if further training is needed. In my case I was always paid for this day but I know some schools don't pay instructors for this. Could be another factor to take into account.
We also had to file paperwork for rental and insurance to match bikes up with trainees. But we could change bikes around or switch to other bikes if there was a problem with the bike provided the paperwork was done. But you can't have two trainees riding the same bike on the same course.
We always used to keep spare keys on site for our bikes. If you book a course I'm pretty certain that they [The Training Centre] must provide the equipment and enough instructors for you to do the course. If a bike breaks down they should have a back-up. If a key gets lost and they have no spare key they should provide another bike and got you mate to pay the excess on the insurance and got another key cut.
For them to turn around and say that your mate wasn't used to the other bike IMO is not a valid argument. A bike is a bike. The clutch, brakes throttle and gear change are all in the same place, it has two wheels and a 125cc engine. You are there to learn how to ride them. Scooters don't vary much in there control layout either... twist and go.