I'm not an expert in this field so don't take this as complete, but one good aspect of this sort of question is that it's very easy to find the complete text of Directives and read them for yourself.
The consolidated text of the directive is here
https://eur-lex.europa.eu/legal-content ... 2-20160420
The EC's guide to the application of the directive is here
http://ec.europa.eu/docsroom/documents/24722
The UK legislation which brings the directive into force in the UK is here
http://www.legislation.gov.uk/uksi/2008/1597/made
The HSE guidance is organised to explain all the rules, not just this one, but the detail on the effect of the machinery directive seems to start here
http://www.hse.gov.uk/work-equipment-ma ... #machinery
Diving straight in to the European Commission guidance on the directive, I did find these words - which do seem to bear out what you have read, surprising as it may seem. They come from page 68 of a 457 page document. (It's long because it's actually quite thorough and discursive.)
§80 A person manufacturing machinery for his own use
A person who manufactures machinery for his own use is considered as a manufacturer and must fulfil all the obligations set out in Article 5. In that case, the machinery is not placed on the market, since it is not made available by the manufacturer to another person but used by the manufacturer himself. However,
such machinery must comply with the Machinery Directive before it is put into service...
(my emphasis on the surprising bit)
I haven't read the whole thing - I was intrigued by the claim but not short of other things to do
So on the face of it, the scope does seem to be very wide indeed, but I am not going to start worrying about inspectors coming into my little workshop.
Edited to add: Looking at your mate's claim that the directive outlaws old Wadkin kit and suchlike - I think he's wrong on that. This is from the long EC guidance document, at page 64
In general, the Machinery Directive does not apply to the placing on the market of used or second-hand machinery. In some Member States, the placing on the market of used or second-hand machinery is subject to specific national regulations. Otherwise the putting into service and use of second-hand machinery for professional use is subject to the national regulations on the use of work equipment implementing the provisions of Directive 2009/104/EC – see §140: comments on Article 15.
There is one exception to this general rule. The Machinery Directive applies to used or second-hand machinery that was first made available with a view to distribution or use outside the EU when it is subsequently placed on the market or put into service for the first time in the EU31. The person responsible for placing on the market or putting into service such used machinery for the first time in the EU, whether he is the manufacturer of the machinery, an importer, a distributor or the user himself, must fulfil all the obligations set out in Article 5 of the Directive.