if the PC that is in there is for monitoring purposes, then leave the switch and go with option 1 and set up a security workstation on your easiest drop possible.

Just remember if you dont have a UPS on both the DVR and the switch you may as well not even use one - neither device will work without the other.

If the PC is just a DVR for remote viewing; just get a small wall mount rack and leave it in the closet, it wont overheat. Even if it fails early (say in 7 years) with all the money he saved on the sub he can buy one every year and still be off better lol.

Try not to make it too complex for your buddy - he likely doesn't give a $hi+ about anything other than having his property secure - and once projects like this get overly complicated you start to wonder if it might be better to keep what you got that you know works.