I turned off Instant Booking because I was encountering too many of the same problems. I rent to solo travelers and couples would try to instant book a room for one person. In your case I would cancel the current reservation and tell the person who booked that their friend needs to create his own account to book complete with photo, verifications and profile filled out. Add to your listing that you only rent to people who book from their own accounts.
I think AirBnB’s “Pending verification” checkbox and “Instant Book” checkbox are to be avoided at all costs in any room you personally oversee, especially if you live at the same place. It might be okay for hosts who live off-site, accept multiple people and pets, and have someone else doing clean-up for them. When I started getting busy I was beginning to ignore doing a checkup on guests (i.e. googling their name online) but even that was a mistake. It’s really wise to express your fears to a proposed guest if they are not coming up on an online search. In one case I canceled a reservation after turning up disturbing online information about the guest (they had publicly posted what I considered misogynistic porn on their google plus profile). AirBnB gave me the $100 penalty fee. I complained and sent follow up to AirBnB with proof and they reversed the fine. Sometimes from the way the guest replies to your explanation, you can just tell if they are a nice sort of person or not. When they have asked why I need all this information when they have had themselves already verified by AirbnB, I explain that AirBnB does not do criminal background checks and do not release the information they have on a guest to a host, not even their full names, until a booking is confirmed. Sometimes I tell them that as a single woman living alone I need to be careful about who I let into my home. They usually understand. It is a confusing situation. I have never asked a proposed guest the things you would ask on a long-term rental contract, such as, “Have you ever been convicted of a crime?” or “Have you ever been evicted?” because of course no one would want to stay with you then. It all boils down to a judgment call, as you say, from your gut.