You can't remove items from trade in 508 client.
At least when I try to add a friend it will say your friends list is full. Then I delete someone and try again and it still says this.
Hmm, I haven't really traded with 508, and with the friends there is nothing we can do about it. It said the same to me, but I had 200 friends, I had to delete 100+ people.
Ryan said something about making a command ::deleteallfriends or something like that. It wouldn't exactly fix the problem but it would help at the same time, just re-add the people who PM you.
Fixed in next update, and I also added ::deleteallfriends.