It was my understanding that it only works at range 2, a friend of mine argues that it's in the firing arc within range 2, can anyone clear this up for me?

Read the card. The target must be in the firing arc and AT Range 2. Not at Range 3 or Range 1.

The FAQ on this defines “At” vs. “Within”

“At” means the closest part of the target’s base touches that range section. For example, when attacking a ship whose base touches both Range 2 and Range 3, that ship is at Range 2.
“Within” means wholly within. For example, normal tournament deployment is “within Range 1 of the table edge.”

Thanks, I thought so