Meet them up in a room (make sure both your decks are valid for the specific room). All your friends who are inside the same room as you will show up at the top of the list. From there, click on his name and challenge him (you may have to click the "VS" icon if the message box appears).
We tried going into the "safe" room and each had a deck, but we didn't see each other. Is there a way you have to sort the names to see them at top?
Go to their profile and add them as a Friend. Tell them to do the same with you. Then go back to the room.
PS - PM me if you still need help. Faster that way.
My friends do not show up on the top of my list when we are in the same room. I keep refreshing to no avail.