I really don't like this story. If he wants to get his girl expensive clothes, then BUY it. If he can't afford it then don't steal it from your good friend. It makes me wonder if he had the motive from the time that he insisted that you leave it at his house.
I would talk to him, tell him I saw the videos and know what went down. If he at least gave back the money or got the items back, I wouldn't completely cut him off. but I wouldn't trust him the same. It would be a downgrade to acquaintance.
You were right with what you did by not just taking this.