1. There is no amount of money, nor any extent of coercion or extortion that would make me have sex with a man. In any way. No way. Ever.
2. If I were asked to come up with five pieces of advice to live by, number one would be to never take, or let anyone else take naked photos of you, unless you're a porn star or you really, really don't care.
3. Number two would be to use your brain, not your penis, when making decisions. Getting women is not that hard, and there isn't a single one of them, no matter how hot, who is worth one minute of unnecessary drama, one fight with a friend or otherwise, or the risk of being extorted, just to get laid. If you disagree with this, please grow up, for your own sake.
Are guys in high school these days that afraid to fight?
Maybe, but I have to disagree with your solution. Someone who is as cold and calculating as the gay perp in this case isn't going to give up that easily. Knock him out, and your photos are going to ten times as many places as they would if you simply deny his demand for sex. To pre-emptively solve this problem, see #3 above.