It's a pity he didn't tell your friend before they got serious, I think that is the biggest mistake he has made and for her to forgive. However, if they have been very happy and, basically, still are, they can surely move on from this revelation. It must be a great relief to him and the secret possibly contributed to his mental breakdown. It just depends on how your friend can deal with it.
He's not the only person to have had a child with an ex, if he wants to do the right thing by his daughter now, that is to his credit.
Some women have had a baby that they gave up for adoption and they never tell their partner, they carry the secret to the grave - which must be very difficult. I have sympathy with that because I was an adopted child and my birth mother never told anyone at all about me, whom she had aged 19, including her husband. Her parents and siblings knew but they didn't mention it to anybody, also they lived far away.
She died early last year at the age of 87 and at her funeral, it was mentioned (her sister and two nieces were at the funeral and said they were aware nobody knew but * had a daughter). A couple of really good friends couldn't believe that she'd never told them! Yet one friend said she'd talked about me - I sent her cards, the occasional letter and presents for Christmas and birthday - and thought I was a niece or cousin.
Yes I have had contact with friend, one wrote to me, I presume my address was given to her by the family, and since then there have been occasional e-mails. One of her nieces (my cousin) had a really big bereavement within her own family this year and I sent her a card and a letter. She was an executor of my mother's estate so her name and address were available but I didn't put my address on my letter because I didn't want her to feel obliged to write back, poor soul.
Anyway I didn't mean to go on about me :-)! Just wanted to illustrate that people do have secrets, often not things that are so terrible in the scheme of things; It doesn't make them bad people, however in the case of your friend's partner, it would have been better for him to tell her about the little girl long ago. That's hindsight. He's told her now and will feel better for it but it might take your friend a bit longer to come to terms with it, especially the fact that she was in the dark for so long.
I hope all works out for them.
Hp737, you are a good friend. Listen to your friend, let her pour it all out but don't offer advice. She has to make her own mind up about it.
for you, a good mate.