This is one of the phrases in the language that is interesting because there are various interpretations of the meaning. Firstly, is it ‘a friend in need is a friend indeed’ or ‘a friend in need is a friend in deed’. Clearly, that would have a bearing on the meaning.
The ‘in need’ is also open to interpretation – is it ‘a friend (when you are) in need’ or ‘a friend (who is) in need’. If the former, then the phrase means: ‘someone who helps you when you are in need is a true friend’. If the latter, it is ‘someone who needs your help becomes especially friendly in order to obtain it’.
So, that gives us four options:
1. A friend, (when you are) in need, is indeed a true friend. (‘indeed’)
2. A friend, (when you are) in need, is someone who is prepared to act to show it (‘in deed’)
3. A friend, (who is) in need, is indeed a true friend. (‘indeed’)
4. A friend, (who is) in need, is someone who is prepared to act to show it (‘in deed’)
The original meaning can be resolved to some degree by the documentary evidence. Nevertheless, there is no unambiguous right or wrong here and this is a phrase that we probably infer the meaning of from context when we first hear it. Whichever of the above options we initially elect for will cement our understanding of the phrase; probably forever, if the vehemence of the mutually contradictory mails I get on this subject are anything to go by.