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My friend plays drop pod marines. I usually castle in a corner with troops screening to prevent melta shenanigans from blowing up my good stuff. He purposely places drop pods in the middle of the army, and says they scatter to just outside of it because they have to be an inch away, which always sets him up good unless they scatter off the board. I thought you couldn't PLACE the original landing spot within 1" of an enemy model. So if I have no spaces in the castle 4 inches or greater open, dosent he have to place outside the wall and roll scatter from there? I think im being cheated.

I don't think there's anything stopping you from deliberately placing the drop pod onto an enemy unit... I could be wrong there, in fact I'd be happy to be wrong, and if that's the case you're golden already. However, if not, there's another quirk that'll help you.

The inertial guidance rule only kicks in if you *SCATTER ONTO* an eligible unit or bit of terrain. It doesn't say anything about deliberately placing them there. So your opponent had better hope he doesn't roll a Hit on the scatter die or it's an instant mishap. Go forth and enjoy!

He is wrong. He only has permission to reduce the scatter, so if the initial position would cause a mishap, then he would mishap (assuming he did not scatter somewhere safe).

As HappyJew pointed out;

The rule lets you reduce the scatter, with the key-word being reduce . If your opponent needs to increase the amount of distance scattered in order to land in a safe location, then they can not place the model and mishap. If they need to move the model in any other direction then the arrow would allow, then they can not place the model and would have to mishap. They simply do not have permission to state 'the closest safe location is here, so therefore it lands here' but have to follow the rule itself in order to evoke it.