first of all this should no longer be the responsibility of your 10yo daughter, she has told him "no" now show her that "no means no" by stepping in and handling the situation for her, this will benefit her in the long run, I'm by no means trying to suggest that you are at fault here, but it is time for you to use this situation as a teachable moment for your daughter to set boundaries with others. By the sound of things I'm thinking that your daughter has no business having a relationship with this boy for any reason, at this time, if he is already showing signs of negative behaviors toward her I can't see that the relationship has any benefit for your daughter, her safety, emotionally and physically are the most important thing, and it is okay to stop the relationship. I feel that teaching children boundaries is very important and this boy is not respecting them.
as far as how to tell your friend, which was you original question, just be open honest about the situation, let the parent know that the behavior is unacceptable and if it continues that your daughter will no longer have play time with her son. if a 7 year old mentally challenged child is allowed to run around late at night, it is neglect on the parents part, please report it. Children need to respect adults, and if the child can not respect your limits then he needs to not be around, if and adult can not respect your limits for your child then they are not your friend. If the child's parent is at home when he comes over and is ringing the bell I would call her and tell her that you have told her son that your daughter can not play at this time and he is continuing to ring the bell can she please come get him, if the parent is not home then whoever is taking care of him needs to come get him, if no one is watching him then call the police, he is to young to be unsupervised.