Regarding your previous experiences, its is very much up to you if you want to include or not. For e.g, I worked part time in a bakery before, but I didn't include that into my resume since I couldn't make a connection between working there, and applying a job in the IT field.

Depends, what was the mental illness?  Did he pose a danger to others? and does he have written clearence from a doctor that he's OK?

Assuming everything is OK - it should NOT count against him, but at the back of an interviewer's mind, it probably will. 

How I would play it is don't mention the illness in the resume.  Just put down the 2-3 year gap and leave it as it is.

I would cover it up as much as I could.
Don't be nice and honest out there, the world is always harsh.
On the surface, potential employers may seem not to be bothered, but in reality it will definitely be an issue.
It's a risk to the employer after all.
Your friend is lucky enough to recover, he should give himself the best chance in career and life by moving on and erase that chapter from his life.
Nobody is gonna know.
Create a good story, took gap years to go backpacking around different continents etc.

Normally do u guys use present or past tense for working experience description?

I am currently with company X.
I started off with them in position A, then promoted to B, and now in position C.

So in my resume, should I mention about my previous positions A and B and its respective job responsibilities?

thanks!