First silly question. Are you running over a LAN, or over the internet? If a LAN you need to change each systems Game Port to different numbers or it will cause problems.
If you are doing it over the internet are you, or your friend, able to see your server on http://www.iscandar.ch/?Type your server IP in there. See if it shows up. If you are running an internet game and it won't show up there then no one will be able to connect.
Lastly is the server running across a wireless network? If so you need to set up your router for Port Forwarding.