My BF says that most of the dry yeast sold in stores is already dead. Is that true?

Yeast expires because it's a micro-organism (a fungus, in fact) that eventually dies. Your foaming yeast is still alive and should be fine to use; the expiry date is a decent estimate of how long the yeast will last, but various conditions (where and how yeast is stored among others) affect how long it will live.

If you bake a lot (yeast baking), look around for Fleischman's Instant Yeast in 1 pound foil bags. Yes, 1 pound. Lasts forever and it's a lot easier to use than "active dry" yeast - it goes in like a dry ingredient, and there's no proofing. A pound makes a lot of bread and it should cost less than $5.

Red Star works fine too, and is available in 1lb foil bags at Costco.

yes, dry yeast is sort of dead. but there are NOT vials of live yeast in water!! there are little cubes of live yeast in the refrigerator cases! I like these best when used for frying doughs like for donuts as the dead yeast has a nasty habit of collapsing when it hits the hot oil where the live yeast does not.

the live yeast is a result of the beer brewing industry. they are the left overs! if you go to a brewery you can purchase pound blocks of live yeast otherwise you get the little 1 x1 x1 cubes at the grocery stores. Bakeries use the pound blocks. We used them at a rate of one a week.

Only the nutritional yeast is dead, The bakers' yeast is dried and dormant. Place it in water with a bit of food (sugar) and it comes out of dormancy and starts reproducing like mad. Brewers and vintners use both dried (dormant) yeast and liquid cultures. If you are interested in these and willing to pay much more money, check the links to the advertisers on http://byo.com./ Considering the placement of your question, I assume that you would not want to do this.

He's wrong. If the yeast was dead, it would not make the bread rise.

not dead, just hibernating. warm liquids activates the yeast to "wake"

If it were dead, it would not have the rising power to make bread. It is inactive, not dead.