I don’t actually know how to set up a server. There are other players on these forums who manage their own servers, maybe they’ll chime in. In the meantime, perhaps this topic can help:
One thing I can tell you for sure, if you want your server to have all the stuff you guys did when you played together, you’ll need to copy the game.db file (or DLC_Siptah.db if you were playing Isle of Siptah) from your friend’s computer and set your server to use that one.