As you put it, this is one of the so-called 'unanswered questions', that is, you are really asking 'Does the world exist?'
Such questions deal with opinions, points of view, diṭṭhi's; and there is no way of holding one side of such a controversy without opposing the opposite point of view; there is no way of resolving the conflict; and such a state does not satisfy the search for truth. Such being the case The Buddha abstains from answering such questions because debates about existence and non-existence do not conduce to the ending of pain which is the fundamental point of what the Buddha teaches. You can see the futility of this sort of debate in the result of your discussion with your friend which only ended in incresing your confusion.
He who sees the origination of things cannot justify in mind the point of view that things do not exist; he who sees the ending of things cannot justify in mind the point of view that things have an ultimate reality.
What is the case is that the subjective individuality has identified with the six senses and once such an identification is made all perception is made relative to the input from these senses.
The eye comes into contact with a visible object and visual consciousness arises. Visual consciousness then becomes the sense-object of the mind sense.
So you see that subjective experience of the sight of a visible object is based on second-hand information. Since at this point your 'reality' is a construction made entirely by the subjective mind, that means that without escape from identification with the six senses, you have no ability to directly see whatever is 'out there'; there is no way to determine the truth or falsity of any claim that a thing exists. It is a hopeless situation, like a cat chasing its tail, and as such should be dropped as a waste of time.
Understanding this way of structuring the existing being, you can then see the logic of the statement:
"in this very fathom-long body,
along with its perceptions and thoughts,
I proclaim the world to be,
likewise the origin of the world
and the making of the world to end,
likewise the practice going to the ending of the world.
For 'the practice going to the ending of the world' see any good description of the Magga. I suggest: