Is it permissible to take money in exchange for enabling someone to fulfill their sexual desires, with the intention of teaching them a lesson to refrain from seeking indecency?

Sodomy is one of the worst crimes. If your friend repents and becomes righteous, then repentance erases what came before it; otherwise, part ways with him. The money he paid you is not permissible for you to benefit from, because it was paid in exchange for a forbidden benefit, so it must be returned to him. What was incumbent upon you was to condemn him and part ways with him, not to allow him to pursue it.