Fly a Cessna like a pro in a real airplane or in MS flight simulator? Flight simulator is not the real thing. In many ways it's a toy.
For VFR flying, MS Flight Simulator is a toy and nothing more. You should not use it to practice "stick and rudder" skills as you will probably develop bad habits, like your friend said. Now, using it to learn how aircraft instruments work, how VORs work and what not, that's a different story.
If you already have a private pilot's license and are starting to work on an instrument rating, only then do I feel that MS Flight Simulator can be a valuable tool. I liked using simulators, when training my students for an instrument rating, because they are more unstable and harder to fly than a real airplane. This forces the student to develop a quick instrument scan. It also tends to teach the student that "less is more" when it comes to controlling a plane. Whenever I had a student who just couldn't handle flying an ILS or a VOR approach, I stuck them in our old, crappy simulator. That always fixed the problems because it was such a ***** to fly.
It's great that you've learned so much from using it, but remember, when it comes to learning the stick and rudder skills, nothing can replace a real airplane. Even the full motion level D simulators that airline pilots use are a joke when it comes to flying like a real airplane. For developing your instrument scan and enforcing what you read out of a book (like how a localizer works), simulators are great.
Lastly, don't forget that real airplanes have other distractions like other airplanes, ATC, turbulence, etc. You can't experience that stuff in a simulator.
Edit: Example: Holding patterns is something that I would teach a student in a simulator. There is no reason to go up and waste the student's money when I can teach them how to enter a hold in a simulator. Once they got the hang of it in the office, we'd do it in the airplane to see how they do with real world distractions.