You're not going to get anywhere suggesting things to him until he finds his own drive to improve; it's not something you can force him to have. Only he knows what is in his best interest. But you can point him in the right direction with what may be a good guess.
For the sake of not bringing up any bad feelings (assuming that there are about this; sounds like a recurring thing, if it's anything like my own past experiences aha), stop trying to give advice. For a few days, just go with it - play the game for what it is. Play the game. Don't play the competitive game. Play the fun game. That's not to say you can't play competitively, or use items or some crap, but just do whatever and don't mind too much about winning, or bad habits, or improvement. It's sometimes really easy to loose sight of the fact that we play this game competitively because we enjoy it, and that ruins friendships and causes arguments if it's taken too seriously. Take a break and just play, and feel good about it.
Once you're both about ready to, and you feel like he's appealing more to the game, show him more competitive stuff. Don't introduce it as such - if you label it as advice or things competitive players do, it'll get ignored or might carry old feelings back over. Instead, show him it via vids. Like maybe when you're not playing, call him over to check out some sweet combo or edgeguard you saw M2K's sheik pull off on youtube.
"DID YOU SEE THAT D-AIR FOLLOW-UP INTO BLANK??!"
"THAT NEEDLE LAND-CANCEL INTO DOUBLE JAB SHIELD PRESSURE THOOO"
(As a Sheik main/secondary...god those sounds so lame/boring, but it can get hype for us if it's done well xD +remember Sheik thrives off of playing lame, so be prepared to encourage lame playing, as long as it's good competitively. Getting him to learn stuff and then just telling him off for playing lame, not matter how lame it is, isn't gonna get you very far. Take it as a challenge to overcome lame-plays. Far too few people do so and let it get way too much to their heads aha)
Get hype over it. Picking vids with good commentary and good matches is big too...worst thing that could happen is you were getting hype over something he might not fully comprehend (like...how much skill something took) and he'll just begin to think you're hype vids are boring. Good combo vids are always safe to get the ball rolling. Then move onto stuff you spot in regular matches that you know HE will understand and get hyped for. If he shows more than just a little interest at some point in-between and can't figure something out...leap on it. Be a lazy suck-up and research how to do it for him. Learn it yourself to demonstrate how to do so, if you can find vids and he's not yet ready to research on his own.
But anyhow...LAWD, when first starting that off with vids and stuff, please don't point out old things you've said in the past. Chances are, he'll notice them on his own, and all bringing them up again would do is...well I already said. Just avoid anything that may bring up old feelings, because no matter how right they are, negative connotations are attached to them. If it makes it easier, imagine that everything in you wanted to suggest in the past implies an "eff you" feeling towards him, even if it doesn't. At least for the next month once you try easing him into the interest in competitive stuff. Can't be too safe, don't wanna screw up your already second/third/whatever chance at it.
You have to remem that...some people just don't share the same interest immediately in improving competitively. Often, it's the way it was first presented to them. Did you start smash on your own, or at least start researching it and learning it competitively online mostly by yourself? Or did someone teach you well along the way, who knew what he was doing? Chances are, it was the former. It's hard to do the latter, because for those of us who have that drive already to improve, it can be hard to understand why others don't want to. But it's often because they just either 1) haven't seen enough yet to inspire their hunger to get better and pull off the crazy stuff the pros do, or 2) simply don't have enough interest regardless. The best thing you can do is just throw some vids his way and see if he gets into it. But if not...oh well. Even if he's giving you some bad habits, having a playing partner of any skill level is more than what most people have, so be grateful for him being interested at all anyways. If you notice you may be building habits, just note it down, find ways that pros avoid that, and practice doing it against him, and just pretend that he would've gone and B-aired you or something. Or keep it in mind when practicing against other Sheiks later down the line.
TL;DR: idk, just don't lose your way lolol. Remem what's important, go back to the basics, all that cheesy stuff. And don't be lazy and read the text above lol
EDIT: also, when you feel he has a mindset that's ready and more open to learning stuff, bring him to a local tourney. Again, introduce it as a cool hangout or something, not as some learning opportunity. I'd pounce if it was introduced as the latter, but not everyone's like that aha. If he gets beaten down, don't have an I-told-you-so attitude. Chances are if you're at a similar level, you'll get beaten down too. Sympathize and encourage him to keep going, try figure out how you both got creamed, and work together. Just keep trying to build more drive, in mutual interest, and in a way that doesn't come off as you being a teacher and pointing out what he's doing, but a friend that just realized something sick to share.
