Both the crank and the balancer have keyways cut in them. The balancer keyway is square in cross-section. The crankshaft keyway has parallel sides, but the bottom of it is curved. A woodruff key slips into the crank keyway. The woodruff key is shaped (sort of) like a semicircle - so the curved part of the key fits into the curved bottom of the keyway in the crank. The woodruff key can be removed from the crank, but most times it simply stays in the crank. Normally there is no key to install or replace with a balancer replacement. You simply remove the old balancer, the key stays in the crank, and the new balancer slides on - assuming the balancer keyway is aligned with the crank key. Capice Zarn?
If your balancer went on ok, and the car's running ok, then your key stayed on your crank (like it was supposed to), your balancer aligned with it and slid on, and all's well. Except for your friend who's either yanking your chain, or isn't as informed as he thinks he is about 5.0L engines.