Elf friends now exist. Becoming an elf friend is something I'll leave to the rest of you to figure out, however, I must first explain this.
Elf friendship is represent by an object. if this object is dropped, it cannot be picked up. It cannot be looted, so if you die you lose elf friend status.
To use your elf friend status, give the object to the person you want to let know you are an elf friend. If he cares, he'll react and give it back to you. If he doesn't he'll just keep it because he thinks you gave him a present. Understanding that since you can't loot it and give it back, for the time being I will answer the question 'Should I give this to this mob' or 'I gave my elf friendship away, can you help me?'
Right now, aside from dying or dropping your status inducing item there is no way to lose elf friendship status. However, in the future this will definately change.
Good luck and enjoy. Z