You'll never know what actually happened unless you or one of your group shoot the deer and find evidence of it being shot previously.

But, my guess is the same as some others, the slug probably hit high in the shoulder/loin area. The typical reaction is the deer drops, then thrashes, then gets up and runs off. There would be some blood and hair left behind, but not a bloodtrail like your friend was expecting and he may have overlooked it.

I have done this myself. I did find blood to follow for about 150-200 yds., then nothing. I read a book by John Trout (I think) on trailing wounded deer, and this is the exact reaction he describes for deer hit in the loin area.