I heard that a judge said legal software was okay for personal use but was tantamount to practicing law without a license when used for a friend or relative. Is he right?
The short answer is no, the judge was wrong. For the long answer, you'll need to revisit a case in which the Texas Bar Association tried and failed to suppress self-help legal books and software. You'll find the whole story right here on Nolo's website.
Fortunately, other states have not attempted to take the Texas anti-consumer route. Courts have consistently ruled that creation and use of self-help legal books, software, and forms are in line with every American's right to self-represent.