FB lets you put people into "lists"of friends I think this is mainly supposed to be an organizational thing, but you can use it to block people from seeing that you're online to chat but still stay friends with them, and it's easier to make a group (IMHO) than to block chatting individually.
Here's what you do:
Log on to FB, and on the right hand side, below "Favorites" and "Groups" there should be a list of "Friends". Hover over the "Friends" title and a little link called "More" should appear. Click it. This will show you all the "lists" of friends you have. If you've never done this, you'll probably already have some as FB auto-groups some people for you. In the top right, click the button that says "Create List". Call the new list "No Chat" or something. In the "Members" list, start typing this guys name and it should auto-complete for you. Do this for all the other people you don't want to chat with.
Then, go down and click the "Options" button in the chat window (it looks like a cog) and click "Advanced Settings" in the pop up menu. It in the new window click the button for "All your friends see you except..." and then in the box next to that, type the name of the list you made in the above step. Again it should auto-complete for you. This is also where you can block individuals from seeing you're on chat, but I find it easier to do in groups because then I can add/remove them all if I'm in a chatty mood. Then click "Save" at the bottom of that window.
He'll still be able to message you, but it will go to your inbox where you can ignore it more easily
And no, from what I know, people can't see if you've put them in a list, but if you're concerned, just call the list something silly and "nice" so they don't know what you're using it for.