I've been dealing with a similar situation since June. Unfortunately it's still going on. The advice that others gave is basically what I have been doing for the past months. Although my friend's situation is still a mess, I remain someone that she can talk to and confide in. I am fine with this because I feel like when she really needs help, she will have no problem coming to me.
That is why I think the "non-threatening" thing that WileE mentioned is important.
I think you handled the situation well. The only time I would take a more direct approach is when it is a life or death (or another type of serious) situation. However even in those situations there is a very thin line because you run the risk of the person feeling attacked/ alienated and this usually just pushes them further into self-destruction.
In other situations, sometimes you just have to accept other peoples decisions. Sometimes they end up being the right decisions for them (even if it is not the decision you would have made for yourself). Sometimes the decision is a huge mistake but it was theirs to make. In those situations I usually just keep being a friend, keep the "I told you so" comments to myself and help if I can.