Hello, ab9924! How nice to see you again. Have you been well?
Few things: To my knowledge, no US state has a "legal separation" procedure anymore. This allowed a couple to live apart, eliminated join responsibility for their debts going forward, decided custody, visitation and child support issues, etc. It was used in the era before "no-fault" divorces were the law of the land. Once every state adopted no-fault divorce, legal separations became legally archaic. (They may still exist in some states; your friend should see a domestic relations lawyer.)
Should he leave her aka divorce her? It depends. What will the financial impact be of selling a home they just bought? (Most likely, they'll incur an enormous debt and both will have to declare bankruptcy.) Are there children of the marriage? How old are they? Etc. A divorce is a financial, as well as an emotional, choice.
As other posters have written, the issue is complex, and we none of us has enough data. In a long marriage (20+ years), there will almost certainly be periods of time when one or the other partner will not or cannot have sex.
If she said to him "Nah, nah, nah, nah. Now that I have my house, I'm never going to screw you again", chances are, the relationship is beyond salvage. Living with someone in a state of matrimony who conned you financially and does not love you, IMO, is such a hellish thing, I'd leave no matter what the financial hit might be.
But if she said "I have lost interest in sex", this is medical problem and it can almost always be successfully treated. If she said "I have lost interest in screwing YOU ever again", this is more likely a relationship issue. She's extremely angry with him for some reason, would be my guess.
Whether to try couples' therapy before divorcing is a personal decision that only the people in that marriage can make, but if it were me and I was angry either because he cheated on me or because he hit me, I'd be out the door for good in a New York minute.