whats the defouler add on? you mean the emulator that supposedly doesnt work on 04+ vehicles? the cat isnt the problem your right but it is the problem, its high flow, so if your running a little rich it doesnt do what the stock cat would do and it sets the light. if he puts a stock dp on the code will go away and he can pass inspection.

this is from zzps site

***IMPORTANT information concerning High Flow Catalytic converters*******
The downpipes we sell come with a high performance converter. It is OBD2 compliant but it is on the very edge of being so. The PO 420 code is set when the rear bank O2 sensor PCM thinks that the converter is not doing a good enough job. Because the stock cat is so thick and dense, it can still function when the tune is off or it gets old. An error in tuning, running too rich, having too cold of a Tstat, too cold of plugs, or an old primary O2 sensor can all affect the engine enough to set a code when using the cat. This code DOES NOT affect the way the car runs, it just sets an SES light. To fix it, you'll need that code removed from the PCM, or you can run our O2 emulator(not available for ALL vehicles), or you can clear the code and try to tune the car in better to allow the cat to operate more efficiently. This is a situation in which your cars stock sensor was not designed with your performance goals in mind. Please make your purchase with the understanding that over time, an SES light could be thrown due to the reasons stated above. This is not grounds for a warranty claim, as a repair or replace of the cat/downpipe would not permanently fix the code.