I think he's traveling Melbourne > Kuala Lumpur on Emirates, then transferring to KL > BKK on Malaysia Airlines, so with any luck shouldn't have any issues, though I've told him to get down the consulate and see what they can do.

He should have no problems at all, the consulate I am guessing will be no help at all as well.

The consulate told him he will definitely be asked for onward travel at the airport, and they need 24 hours to make a visa, so thats not am option - I'm not sure if he explained his situation well enough but it's scared him into buying the cheapest Air Asia out of Thailand he could find - Hat Yai to KL at 1390 baht!

Just as I thought the consulate would say. If his two flights are in fact separate, Aus to KL, then KL to Thailand there was no need to buy that ticket. I have only heard of extremely rare cases of anyone being asked to show onward travel and it has been when they have really looked like they don't have the funds to sustain themselves.
If he is booked all on the one ticket, probably a good move. Could have just got a fully refundable from Thai though to avoid paying anything.

Thai consulates just re state the rules , useless to try asking them for advice . Is the stop at KL airport a transit stop to change planes ? (ie - he is not leaving the airport at KL and having stopover before continuing to Bkok later) . If so, the Australian airport staff will want to see onward ticket for Thailand . Thats what he will need that ticket to KL for . Did you explain to him that the problem is not being asked at Bkok , but being asked by Melbourne check in staff ?.

I should have said, those cases of rarely seeing anyone asked for onward travel was for travel within Asia, they will nearly most definitely ask for it leaving Australia. What davelliot is saying though is right, just needs proof of onward travel from the first point of landing outside of Australia.