Well, I'd say if the parents haven't had the "talk" with her by this time it's kind of late. But maybe Xerox should jumpstart this thing and see if he can get his mom to talk to his sister and salvage whatever communication is possible. But going to your parents pretty much depends on how they'll react and you know this better than anybody on this board.
If your parents will blow up over this, what message are you sending to his sister if you put her on the defensive for acting responsibily and asking questions about sex instead of learning sex firsthand. Not only was her behaviour innocent, but it was responsible in my opinion. She didn't ask a fellow 13 year old...she obviously felt this 21 year old knew her stuff and she felt comfortable discussing sex with her. Hell, that's more than I was able to do at 13. The only discussions of sex I had at that age were between fellow 13 year olds and it involved a lot of misconceptions, myths and just false information.
I don't like it when others preach morals to others' children. If that's the case, then Xerox should probably let his mom know as apoppin pointed out. But if his friend was just answering Xerox's sisters questions objectively, then I'd say it's best to keep this discussion quiet.
If you want to approach your sister Xerox and just keep this between you and her, just tell her the truth about how you found out. And tell her as a brother your job isn't to tell her how to run her life but you're there to listen and to lend your elderly experience and knowledge. And suggest to your sister that she try and talk to your mom although that'll probably be a futile effort.
-GL