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So..friend hits my squad with a missile kills a couple guys and says you have to take out the guys under the blast but then the unit wouldn't be coherent but most of all he kills my points loaded sergeant! Just wondering if you have to remove guys under the blast or if I could take any one I want out of the unit?

no, you do not. Once upon a time it was required, but not in 5th ed. See the last paragraph of the Blast rules on page 30, main rules.

Okay, thanks now my plasma pistol power sword meltabomb sergeant can survive his mighty missles of doom! (sorry for the description!)

The Blast just tells you how many models are hit. You still allocate the wounds as normal.

It's also worth pointing out that, as per the casualty removal rules on page 24, there is no requirement in the current edition to remove casualties in a way that retains unit coherency. It often wouldn't be possible with the way wound allocation works.

Just allocate wounds as it works best for you. You can even save yourself from some shots sometimes. Last game I took those models closest to the enemy away and his character model, which had only 12" range, had nothing in range left to shoot at. Of course this doesn't work against a mindful opponent who will shoots with those weapons with least range first.

In 3rd edition you had to remove models under the marker; maybe your friend is remembering old rules.

@Murenius, that only works if the 'character model' is in a separate unit. Otherwise, all shooting from one unit happens simultaneously, you check all the ranges, THEN you shoot. There's no way for him to shoot bolters, for instance, you remove some casualties, and suddenly his sgt's plasma pistol is out of range.