Having someone in one of your families act as DJ is a great idea that someone else had. Also, maybe your friend could hire someone to come in & teach you some ballroom dances from some retro era like swing or a South American dance. If it's line dancing, you wouldn't have to have partners for everyone. If the living room is carpeted, ask the dance teacher if that would be okay if you're all barefoot.
Then in the kitchen or dining room, you could have refreshments ready, maybe fruit flavored mineral water & plain mineral water, too, along with cake & ice cream. You might also have a dip tray with crackers or chips, veggies like baby carrots & yellow pepper slices, & hummus dip in the center. Or you could have a big pasta & asparagus salad in a huge stainless steel bowl (low priced for a huge bowl to feed a crowd.) along with a shaker of Parmesan cheese for those who want it. Bean salad is also good. Of course, you'd want to plan a place for people to sit & eat or to talk in between dancing, maybe those cheap stacking resin outdoor chairs & some cheap chair pillows, too.
With the dance teacher there, you'd probably want to have it dressy & have everyone dress according to the era or style of the main dance to be learned. If you like, they could also bring hats for a hat parade either before or after the dancing & refreshments.
However, if you do decide that you'd rather have a costume party & not a dance party, you might want to select a theme like costumes from a particular book or movie & go with that in the decorations, too. Have fun! & Happy Birthday to your friend.