My understanding (and I am not a lawyer) is that you're free to use whatever source material you want (OGC or not), so long as you don't give anything you write (to DM yourself) to someone else to DM.
For example, you're free to use non-OGC material, such as the Forgotten Realms, or the Complete books, in the game you DM. (I don't even see where this'd be a problem if you're advertising your game.) *But*, if you were to write a FR adventure, using rules or fluff from FR sourcebooks, to someone else to run, at that point, you're considered to be "publishing" (even if you aren't asking for any money for it), and, at that point, you're in violation of WotC's IP.
What your player may have heard of is that, over the past few years, there's been two independent (i.e., non-RPGA) Living-style campaigns that used the Forgotten Realms setting. Since the Realms isn't OGC, and since both campaigns (Legends of the Shining Jewel and Living Sarbreenar) were distributing their modules to DMs (other than the authors of the modules) to run, WotC/RPGA had to shut them down -- to do otherwise, after WotC had learned of these campaigns, would put WotC at risk of losing control over their intellectual property, because they hadn't defended it. As long as you're not writing stuff and giving it to someone else to run, you're not doing what those campaigns did, and you're not in any risk of running afoul of WotC's IP.