My friend downloaded LogKext on my computer, so I'm guessing he can see every keystroke, but I've reset my computer so that it's in a condition when I first opened from the box. Can my friend still see my keystrokes? Is he the only person that can uninstall it?
Theoretically speaking, you cannot trust the integrity of your system anymore. Your friend might have installed a different key logger, or even installed some sort of rootkit.
To install LogKext, one needs to know the user's password (to get into administrator mode, AKA root), or needs to login in single-user mode. In both cases, your friend knows too much and has had too much access to your computer.
Resetting Mac OS X to the factory default only clears the files installed normally by users, such as your
I recommend completely wiping out your hard drive and then installing your operating system again.
I also agree with Adnan. I recommend wiping your drive, enabling full disk encryption, and creating a new, strong password. Not only will full disk encryption prevent visitors from using your computer and obtaining your files, but it will most importantly lock them out of single user mode. (Locking the firmware is another alternative for preventing single user mode, but this can be broken by resetting the PRAM so I do not recommend it.) I wrote an article on how easy it really is to root a Mac with an HID or a simple flash drive and install a persistent backdoor.
If you don't have the time (or simply don't care) you might want to take a look at Little Snitch. If your friend has a backdoor on your computer, Little Snitch will be the first to find out.