As the subject asks..

One of my friend disputed a guide's arbitration ruling because he felt the ruling was unfair and asked to esclate the matter to a gm. The guide threatened to ban him after he refuse to back down.

Since everything was done in private tells, I have no idea what exactly was being said nor the tone that my friend and the guide used. I did suggest for my friend to be friendly to the guide... But is a volunteer guide allowed to ban a player?

No they cannot. They can submit the case to a GM for review and POSSIBLE banning. But a guide cannot do the actual banning. I don't think a guide can even world kick someone.

No a guide can not ban a player, but he can help to get him banned if he acts in an undesirable manner..

If it is unwarranted threats, simply /report "title" it and e-mail them about it to circumvent the guide part of the system.

Guides can't ban players, they can esclate things to a GM which might decide to but thats pretty rare.

There really isn't much that can be done for petty disputes and all they tend to do is burn out gms till they start to hate players. My two options from the past are to either roll for it or join with the other party and do something else. It's a game and arguements just waste your time and make the game a lot less fun. Rather than compile an enimies list I compile a list of people who were reasonable and civil. When making groups and responding to requests I usually go out of my way to help those people.