What does an Amended New Matter mean?

Whatever you are being charged with. The best defense is a good offense.

The terminology suggests that you are asking about court procedure in a State other than Wisconsin. This corner of the site only deals with Wisconsin, and federal, law. I suggest you consult a capable lawyer in your own area.

I am not familiar with that term. Perhaps the attorney filed a separate law suit against you, or a counterclaim.

It means that, unlike you, your ex-friend is taking this seriously (she hired an attorney). It also likely means that she counter-suing you, and you must reply to her pleadings. If so, your either your ex-friend or her attorney is not playing fair: you were supposed to be served with the pleadings to which you must file a reply. Go to the court where you filed your suit and ask to see the file (show the clerk the letter you received). If there are no new papers in the file, run a search on the court's computer looking for cases listing your name and/or your ex-friend's name. If you cannot sort all this out, ask for help - there might be a clerk or a pro bono attorney in the court who would assist you. Just don't put this off, because the time to reply to any court filings is always very limited; and you lose the action if you miss a deadline.

Lawyer wants you to reply to the lame excuse the defendant claims is the reason he don't owe you nuthin'. Send the Court and the lawyer a letter telling him you deny all defenses raised. He owes you the money.

This forum does not tell us what state you are in, and New York does not have such a pleading. It sounds like what we call a counter-claim, meaning that the Defendant claims that you owe him/her. So, find a copy and write up a response and send it to your ex-friend's lawyer (keep a copy)

I couldn't tell you without seeing the paperwork, but I strongly urge you to seek representation long before your deadline runs. Good luck.