He is not righteous who works much, but he who, without works, believes much in Christ. - Martin Luther, Heidelberg Disputation, Thesis 25

Welcome to the WT! You are a true Wittenberg-trailer, with your background!
I thank God that he has enlightened you with His truth to bring you to true saving knowledge of His Word. Always wonderful to see new converts. That's quite an incredible story as well, even being a Watchtower member for some time! Consider yourself richly blessed to be called to truth!
I pray that by God's grace, He will continue to bless you and allow you to grow up in faith and in a deeper knowledge of His saving Word. Stay strong in His Word!
Pax Dominus

Your Calvinist friend's interpretation of 2 Tim. seems nonsensical to me.  If "all Scripture" is breathed out by God, etc., that certainly includes the Gospel.  Therefore his argument of "it's all law" doesn't make sense.  Secondly, when verse 15 states that the sacred writings are able to make you wise for salvation, Paul specifically states that it is through faith that this is possible.  And in Galatians 3:12, Paul says that "the law is not of faith," so Paul cannot be saying here that salvation comes by the law; he can only mean the Gospel.

Also, Lutherans specify three different (Scriptural) uses for the law: 1) Curb 2) Mirror 3) Guide.

The law as a curb can be used by anyone to help keep them from committing sins against their consciences.  However, the law as a mirror must be used by Christians properly before the law as a guide.  The law as a guide can only truly be used by regenerated believers.  If one does not have a proper understanding of his own sin first, the gospel is of no use to him.  Therefore, it should work like this: First, the law shows sin and beats down the sinner to the point where he realizes that he can do nothing for himself.  When he has despaired of all of his efforts to fulfill the law and therefore be righteous, then it is time for the Gospel.  The Gospel says, "I know you cannot fulfill the law.  But look at Christ, He has done it all for you.  Rise, your faith has made you well through the work of Christ, not your own."  Then, since the believer is thus regenerated by the Gospel and realizes that he is counted righteous on account of faith in Christ, he is free from the law.  He can then use the law as a guide to show him not how to become righteous by it (he is already righteous by faith), but to serve the neighbor out of freedom from its condemnation. 

You may want to turn this pastor to some passages where preaching, righteousness, etc. are really mentioned.  For example, Paul in his letters makes it pretty clear that the center of preaching should always be the gospel, which alone regenerates and saves.  It is the most important part of preaching: "For I decided to know nothing among you except Jesus Christ and Him crucified" (1 Cor. 2:2).  He makes this even clearer, "that your faith might not rest in the wisdom of men but in the power of God" (1 Cor. 2:5).  Again he speaks of faith (the law is not of faith), and he also speaks of the power of God.  In Romans 1, he says, "I am not ashamed of the Gospel, for it is the power of God for salvation to everyone who believes...For in it the righteousness of God is revealed from faith for faith, as it is written, 'The righteous shall live by faith'" (Romans 1:16-17).  He clearly says that the Gospel is the power of God for salvation, and this deals directly with faith, of which the law has no part.  The "righteousness of faith" is a major point that must be made...we are not righteous by keeping the law ("none is righteous, no, not one" [Romans 3:10]), but by faith in Christ's work.  Paul also has something to say here about the law: "But now the righteousness of God has been manifested apart from the law...the righteousness of God through faith in Jesus Christ for all who believe.  For there is no distinction: for all have sinned and fall short of the glory of God, and are justified by His grace as a gift, through the redemption that is in Christ Jesus...to be received by faith...so that He might be just and the justifier of the one who has faith in Jesus" (Romans 3:21-26).  If your friend wants to preach righteousness of the law, he's overlooking the countless places in Scripture that show that no one is righteous by the law.  In Romans 4, Paul again speaks of how God credits righteousness through faith, apart from works.

Also, just take what Paul says in Romans 3:20, "By works of the law no human being will be justified in His sight, since through the law comes knowledge of sin."  Or maybe Romans 7, which I will not quote here.  It is pretty clear that righteousness is not, and cannot be, by the law.  The law shows sin, the law brings sin, for apart from the law, there is no sin.  Contrast this with the freedom of a Christian:
"Is the law then contrary to the promises of God?  Certainly not!  For if a law had been given that could give life, then righteousness would indeed be by the law.  But the Scripture imprisoned everything under sin, so that the promise by faith in Jesus Christ might be given to those who believe.  Now before faith came, we were held captive under the law, imprisoned until the coming faith would be revealed.  So then, the law was our guardian until Christ came, in order that we might be justified by faith.  But now that faith has come, we are no longer under a guardian, for in Christ Jesus you are all sons of God, through faith.  for as many of you as were baptized into Christ have put on Christ" (Galatians 3:21-29).

Hope that helps!

I was happy to witness my dear brother in Christ & friend Matt Fenn to be received into membership at First Lutheran church of Windsor Ontario Canada today Sunday the 19th 2012! It was a real blessing and a first for me to be at a Lutheran service :) Christ centered cross focused !!! Thanks Matt for allowing me to be apart of this day ,I thoroughly enjoyed it !