If you hit him and take the bike, the problem wont disappear, the situation will worsen. Once you've hit him, you've now made yourself a target to him and his mates. I'm sure if he took the bike from your friend, the thief isn't afraid of him, meaning that he's not going to be afraid to get it back.
I know you've already said that you've contacted the police and they've done nothing, so why don't you follow it up? It's your friends bike that's gone missing, so why are you having to do the work. And to be honest, how is posting on a forum helping get the bike back? You need to contact the police and get it sorted out through there, else your asking for trouble.