What bothers me about the idea of reporting to the police is that if it isn't child porn, but he does have some other illicit stuff on his PC, he could get similarly ruined. I'm talking anarchists cookbook, or some flavours of niche (consenting, adult) pron.
Obviously if you knew it to definitely be child porn then shopping him would be a no brainer.
Perhaps not such a bright idea to be handing over a PC containing illegal materials to another party then.