A broken power supply would not give him this problem. The loose wire thing is probably not it either, as THREE whole wires would have to come off for that problem he has to occur. The PCE RGB connector has 8 wires:
1. Composite video
2. Right audio
3. Left audio
4. +5V
5. Ground
All of these (well, except the audio ones) are 100% necessary to give any signal whatsoever (and he does get a signal, so it cannot be either of these).
The additional pins:
6. Red
7. Green
8. Blue
Must ALL be disconnected in order to get a b/w picture. If not, it would either be green-blue, red-green, just blue, or another combination of that.
It COULD potentially happen though, after dropping the system in the floor or something similiar, as exactly those (and only those) are soldered to small pins on one of the chips in the system. If they were poorly installed, they can easily come off after even a small bump.
But I really think the problem is that his TV doesn't support 60Hz in composite mode. That's why the picture flickers and is in b/w.
It does support 60Hz in RGB mode however.
Did you change your TV? Or the cable itself (back to the original a/v cable)? Or did you connect the Duo to a different SCART connector on the back? Often, only one of the two connectors has RGB support. Try using the other one.