It has always been there rule that you have to keep your work permit valid during your entire application process, that's why your friend's application was denied (also, not everybody under strategic stream is exempt; only engineering occupations). Also, it has got nothing to do with when you submitted your application. If your work permit expires any time before you get nominated they automatically reject. AINP does not entertain appeals. The next step is to go to your local MLA or Human Rights division; although I doubt they can do anything in this situation.