You say it sounds to you as he does have a neutral, Please explain. If he has 2 insulated wires and one bare grounding wire going to his shop and 240v, where is the neutral for the 120v circuit?
He has one bare grounded wire or neutral.
In some cases NAEC does not require that a neutral be insulated. I would need to do more research to confirm that 30 years ago it was or wasn't acceptable to use the bare conductor as a neutral. The requirement for a grounding conductor is recent. 30 years ago the requirement was two "hot" insulated conductors and a neutral or grounded conductor. I'm a little vague whether it was then required to be insulated. No grounding conductor was then required. In that day we routinely ran three THHN conductors in conduit to a garage. At the garage it was treated as a house, 3 insulated conductors. We grounded at the garage as we do at the house even now. I'll look for older code books, the oldest In the office is 1999. The old ones are in the cellar.
1999 code appears to require insulated neutrals with exceptions, (in article 230-22,30, and 41) as part of multiconductor cables, in services overhead, underground, or service entrance cables. The conductors we are discussing are part of a feeder. Article 225-4 Exception addresses overhead feeders. If 1999 code exempts feeders underground from insulated neutral requirements, I haven't found it.
While I still don't know where this bare conductor is connected at either end, it must be functioning as a neutral or grounded conductor, 120V loads wouldn't work. I believe the lack of insulation on it is where the most difficult to rectify violation exists.
The worst shock of my life was from a bare, dead, overhead service neutral. A remote home with no other transformers within a mile had a power outage, line fuse had blown. In my mind there was no power in the area. Working on the damaged neutral, I became the conductor from the transformer center tap which was bonded to high voltage ground conductor. The entire electrical grid sought to reach ground through my right hand, through my body, out the left and on to earth via the home's grounding system. I couldn't let go! Brain said let go, hands wouldn't respond. My feet did work, I was able to back away and pull off it. Forearm muscles were sore a long time! I've been more careful since!