My concern remains though, that entering the lottery demonstrates an intent to immigrate. And so, I'm not sure how that may or may not affect my friend's eligibility for non-immigrant visas that do not allow dual-intent, or the VWP, meanwhile.
Yes, the lottery application implies an intent to immigrate, but every nonimmigrant must overcome a statutory presumption that such an intent exists. The lottery application may make it harder for someone to overcome that presumption, but it is possible to do so by showing that one does not intend to immigrate in connection with the present visit.
It is certainly possible to get a visitor (B) visa with a pending immigrant petition. Here's what the Foreign Affairs Manual has to say about it, at 9 FAM 401.1; see especially paragraph (e):
9 FAM 401.1-3(F)(2) Residence Abroad Defined
(CT:VISA-225; 10-20-2016)
a. The term “residence” is defined in INA 101(a)(33) as the place of general abode; the place of general abode of a person means his principal, actual dwelling place in fact, without regard to intent. This does not mean that an alien must maintain an independent household in order to qualify as an alien who has a residence in a foreign country and has no intention of abandoning. If the alien customarily resides in the household of another, that household is the residence in fact. NOTE: Only the following visa categories are subject to residence abroad requirements: B, F, H (except H1), J, M, O2, P, and Q. When adjudicating this requirement, it is essential to view the requirement within the nature of the visa classification. Discussion of the requirement in the relevant sections will provide guidance.
b. The applicant must demonstrate permanent employment, meaningful business or financial connections, close family ties, or social or cultural associations, which will indicate a strong inducement to return to the country of origin.
c. The residence in a foreign country need not be the alien’s former residence. For example, an alien who has been living in Germany may meet the residence abroad requirement by showing a clear intention to establish a residence in Canada after a temporary visit in the United States.
d. Suspicion that an alien, after admission, may be swayed to remain in the United States because of more favorable living conditions is not a sufficient ground to refuse a visa as long as the alien’s current intent is to return to a foreign residence.
e. You may properly issue visitor visas to aliens with immigrant visa (IV) applications pending with the United States Citizenship and Immigration Services (USCIS). You must be satisfied that the alien’s intent in seeking entry into the United States is to engage in activities consistent with B1/B2 classification for a temporary period and that the alien has a residence abroad which he or she does not intend to abandon. While immigrant visa registration is reflective of an intent to immigrate, it may not be proper for you to refuse issuance of a visa under INA 214(b) solely on the basis of such registration, unless you have reason to believe the applicant’s true intent is to remain in the United States until such a time as an immigrant visa (IV) becomes available.
The same principles will apply to entry under the VWP, although it is more difficult to find authoritative references online. Logically, entering the DV lottery has a weaker bearing on immigrant intent than filing an I-130 petition, so someone who has entered the lottery should be at least as able to visit the US as someone who is awaiting approval of an I-130.
Whether the traveler is using the VWP or a visa, it will also be necessary to convince the immigration officer at the border that there is no immigrant intent, so attempting to enter as a visitor will always be riskier with a pending application for immigration, but plenty of people have done it.
