"Friends only" does now seem to be working. However, it's maybe worth noting that the threads seem to have the same "mouseover" issue as threads in Octopus Rock - the first few lines of the OP in a "friends only" thread can still be viewed by hovering the mouse on the thread title.
Well, you shouldn't be able to see a friends only thread you don't have permission to. If you have the permission, you can see it, mouseover it, etc.
Are you saying there's a friends only thread you're not supposed to be able to see which you can (a) see in the thread listings and (b) therefore mouseover? If so, that's a problem.