Hello Larry,
To give you my answer to your initial question: Judaism is a religion, not a flesh people. But, as you may have guessed, it's a bit more complicated than that. Let me comment on a couple of things by quoting you:
I think you are right and see things just that way. I fail to see how your friend was "anti-semitic" nor why he got angry over this. I will say, however, that anything touching Jews or judaism it a real powderkeg and one has to be careful of one's wording. Even among Christians. Shouldn't be, but is.
