Just to get the ball rolling, as someone who has replaced various components
on her 19991 Civic that use sealant like you mention (e.g. valve cover
gasket, oil pan gasket, engine block coolant drain bolt) a few times now:

I don't think I've used sealant either of the times I've replaced the valve
cover gasket (also known as the "cylinder head cover"). My Chilton's manual
says use it "if necessary." (Instructions for replacing the gasket are in
section 3, "Engine and Engine Rebuilding." They're also probably free online
at www.autozone.com 's free repair guides.) Putting the cover in place
carefully is important; if the gasket becomes twisted during installation of
course it won't seal correctly. I recommend a torque wrench for the cover
nuts. They're only supposed to be tightened to 7 ft-lbs. on my Civic. I
tighten each one gradually, and bicycle spoke fashion.

Also, the grommets that go around the four (on my car) cover bolts do harden
and fail after a while, leaking oil. How old is your friend's car? Maybe the
oil is coming from these. His car may be due for new grommets. I estimate
six years is a good time to replace these.

The sealant you have in mind may be "Permatex Ultra Grey," advertised as
"sensor safe RTV silicone gasket maker." One can go to www.permatex.com ,
click on "Automotive" on the left, then "Under Hood." The different sealants
and their applications are listed. Note that the "Ultra Grey" description
specifically states it's good for valve covers. There are other Permatex
sealants listed there that are also said by Permatex to be good for valve
covers.

I'm pretty sure Autozone carries most Permatex products.

If you need a low range torque wrench just for this job, consider a cheap-o
Pittsburgh model from Harbor Freight. Currently it's a little under $30, but
HF has a lot of sales. I mention it because valve cover replacement jobs are
the main reason I have a low range torque wrench. I compared the cheap-o
torque wrench to my larger torque wrench and it seems accurate enough. It
just probably won't last as long.

Any sensor-safe RTV is OK. Permatex is good. You're supposed to use
Hondabond, the closest aftermarket equivalent of which is Permatex
UltraGrey. I just use pretty much any hi-temp RTV I can find. Right now
it's the orange stuff, just because I had a tube handy when I did the
valves last.

You put a tiny dab in the sharp corners where the cam bearing caps meet the
cylinder head.

If the gasket is OEM and the surface is totally, squeaky clean, with no
grains of grit /anywhere/, the use of RTV in that location is optional and
you can just smear a micro-thin layer of oil on the gasket before assembly,
then wiggle and thump it into place to make sure the sharp corners settle
into place properly.

Also...and this is critical...do NOT lose those little rubber grommets on
the nuts. They prevent leaks.