Is this legal for a CEO who owns 51% and spends company funds on their own private interest?

This is some chance that the CEO's conduct is legal, but it is not at all clear. The majority shareholder has certain fiduciary obligations to the minority shareholders, and the CEO has certain fiduciary obligations to the corporation. Obviously, spending money for personal needs like this raises some questions. The CEO may try to claim that his Employment Agreement with the corporation say that this is permitted compensation, but even that may be suspect. The rights of a minority shareholder here are limited. In general, minority shareholders can pursue a derivative shareholder action against the corporation, they can sue directly for breach of the majority shareholder's duty to them, or they can bring an action to dissolve the corporation. Not all options, however, are available in every situation. You would need to speak to a lawyer knowledge about corporate shareholder disputes to fully advise you. You should also bear in mind that the corporation will likely pay the attorney's fees of the CEO here.

From your description the actions of the CEO do not sound proper, however what interest does your friend have in his behavior? To the other co-owners of the operation would certainly have a reasonable complaint for such activities.

It likely is legal. That would be between the owners. If it is not legal, the cause of action would be with the IRS or the other owners.

No, this is not legal in that creditors and others who the company owes money to can use this as a way to attack the protections a corporation gives him.

It may be legal. It depends on what the other owners think about it. You have not said if the other owners are family or independent third parties. Normally, it isn't the employees' business as to what happens at the corporate level. Presumably, the books are reviewed by accountants and the information is distributed to the other owners. Also, it is entirely possible that there is an employment agreement between the company and the CEO that requires the company to pay those expenses.

Minority owners have certain rights. Much may turn on any employment agreement the company has with the CEO. Start with the Articles of Incorporation and By-laws. How the CEO spends corporate money may create an unfunded tax liability for both him and his company. The minority owners may have a claim for breach of fiduciary duty. If you are a minority owner, you should gather your company documents and speak with an attorney.