Is the questioner's statement correct that committing a sin indicates a deficiency in faith, based on the premise that faith increases with obedience and decreases with disobedience, and that among Allah's names are Al-Raqib (the Watchful), Al-Hafiz (the Preserver), Al-Muhit (the Encompassing), Al-Alim (the All-Knowing), Al-Khabir (the All-Aware), and Al-Basir (the All-Seeing, the All-Perceiving); or is the statement of the other party correct that it is not possible to judge people's faith by outward appearances?

What your friend said is incorrect, for people are only judged by what is apparent from them. The Prophet, peace and blessings be upon him, said to Khalid ibn al-Walid, may Allah be pleased with him, when he said: "How many a worshipper says with his tongue what is not in his heart?" He replied: "I have not been commanded to probe into people's hearts, nor to split open their bellies."

What you said is correct, for abandoning some acts of obedience or committing some evil deeds are signs of weak faith. Faith increases with obedience and decreases with disobedience, as is the creed of the People of the Sunnah and the Community.