I wouldn't necessarily call it a mental disorder. Some people want to impress others by distorting reality, by telling lies to make a better impression. This is not something I'd recommend because the truth has the habit of revealing itself, it's going to come out eventually and then you loose.
Once you lost the trust of someone it's very hard or in some cases even impossible to gain it back. The best way and the easiest is to always tell the truth.
However, some people suffer from mental disorders, some have an alter ego, some have personality disorder but you can't know that, in some cases when you find out it's too late.
In your case, if this person is your friend and he's telling you lies, then you need to choose your friends more carefully. Friends don't lie to each other. Friendship is about trust, reciprocal help and not about deceiving the other.
I wouldn't say it is a mental disorder necessarily ,but a loss of reality. He is obviously trying to impress you and feels inferior to you.
The truth normally always comes out and by lying to you it's not great. You have to find your friend again as he seems to have lost his way. He is lying to cover up for his short falling in life and is fairly common.
In the case with your friend you need to make a decision whether you can trust him again and maybe test him on something that you know is true. It is sad that you have known him for along time and I hope things work out.