Why won't he call her by her name?

What is his reason for not using her name?

Since she mentioned to him that it bothers her, and he was "open" enough to try to change his behavior, and was not able to sustain the behavior change, so it does sound like a habit now.

I think the most important piece of information would be to learn more about why he does this: why he started doing it in the first place, and now why he continues?

Can your friend request that he call her by another "pet name", that she is fond of? In every relationship there are compromises, but saying "hey, you" or some form of this would be upsetting, but honestly, this sounds like the least of their concerns if what you are witnessing/hearing from your friend is true: that she "puts up with him". This does not sound like a happy, healthy marriage from your description. Have they tried marriage counseling? If they have been married for 40 years, are they empty nesters now, or still raising children in their home?

I am not aware of any cultural reasons that a husband would not address his wife by her first name, but are you aware of their race or ethnicity?

It doesn't particulary bother me though I don't like to see her unhappy and she gets sad about it. They have been together so long as her situation is difficult...she has always been a stay at home Mom and has no back up plan and puts up with her husband.
She once asked him to use her name and he tried for a while but then things went back to normal again. It's an unusual situation but she continues living in this way.

If it has been this way for 40 years and he is much older then she is , he might resist change, especially if they are of different generations! Maybe it's his age or his background? It's only disrespectful if he means it in that kind of way. If his wife isn't really bothered by it (since they are still together~!)_then maybe this is just how he is - I guess we all have our quirks :) I'd have to think that after 40 years, she would have said something to him by now if it was really bothering her. Is it upsetting you more than them? Maybe the guy doesn't even realize it, and it's just a habit. If noone has said anything to him, then he mightn't even know theres a problem!

She can't change things, only he can. The behavior can only be changed by the person himself. She might change her REACTION to his behavior though and see if that works.
Do you think he takes her for granted, or does she? She may not feel that way. I know other people's relationships often have me wondering what makes other people tick but we're all different. If they are together 40 years, their relationship must be working for them, unless they are trapped by finances or something like that.

I don't know if anyone can tell you what any of this means because they have a very long history together that only they really know and understand. There could literally be a hundred reasons or it could just be that this is his way of living his life. He could be an old school kind, who is not going to talk about his emotions and who opts for a private, internal kind of life.

It does sound a bit unusual but human behavior often is...
I'm not sure if this helps. People are so varied and individual in their choices. She can't change him. only he can. At this stage in the game, it may be of little value but people can change if they really want to! But they have to want to and they have to know there is a problem to begin with!

I hope she can work it out!