Outlet neutral bonded to ground?
 

A few months ago a friend asked me to help him (that means for me to do the work) find out why some of his garage outlets did not work. 5 outlets. 3 work, 2 did not. What I found was between outlet 3 (working) and outlet 4(dead) the wire fed an outside outlet. The outside outlet had a broken hot lead. Repairing the wire made all the outlets alive. What I found while trouble shooting alarmed me. This house was built in the late 50's or early 6o's and uses 2 wire NM cable without a ground. All the outlets in the garage and outside were 3 wire. Some one has bridged the neutral to the ground terminal at each outlet. I removed the first outlet in the circuit and and installed a GFCI, then I removed the bond strap from neutral to ground at each outlet. I believe that made the circuit safe and code compliant. I advised my friend to call an electrician and advise him what I found and the correction I made. My fear is the rest of the house may be wired the same, as all I see is 3 wire outlets in the rest of the house. I did not open the CB panel to see if the other circuits had ground wires. It has been 2 months and my friend has not done anything. (I have reminded him) How dangerous is this situation and is there anything else I can or should do?

You did fine and likely the house is bootlegged at the receptacles. He just needs to check them for the bootlegs to the neutral from ground screw one the yokes. Remove them and then either gfci or put back 2 prong outlets. Most everything we use in the home aside from a few things in the kitchen are 2 prong anyway.