Landlord adding extra months to move out date

[Sarah Sparks]

I have a friend who mailed a certified letter of intent to move. Letter to be recieved before  January 1st. Landlord didn't acknowledge the letter until the tenant wrote another letter in late January asking to use his security deposit as their pay month's rent. Only then did the landlord reply saying the first letter got their too late for the proper 60 day notice. So she's extending the lease out another month (ending March 31st). And that the lease says using of the security deposit as last month's rent is not allowed. 

This was a 1 year lease that changed into a month to month lease that kept all lease requirements for notice to vacate in place. This summer would be 5 years at this residence. Does he paint or put up new blinds?

This friend is willing to pay the actual last month's rent (February) but does not want to pay the extra month (March) knowing he sent the letter. Also, the landlord didn't acknowledge the lalleged one day late letter (says it's postmarked the 2nd). The landlord could have told him the day she recieved the letter saying it was not recieved in time and that it was not the accepted 60 day notice. 

How does my friend proceed as he wants to keep a good credit score?