He should apply undecided to a university or liberal arts college of his choice which offers a BA in music. They are almost all non-audition programs, at least at the freshman level. He could also double major with physics and needn’t give it up. He could also continue to pursue music in college as an extra-curricular and just take guitar lessons, perform in college ensembles, and pick-up bands too. There is no need for him to apply to a School of Music for a BM for which, as you surmise, he is unprepared. And being a National Merit Scholar will indeed help him get into a program where he can continue with music.
Take a look at this thread: http://talk.collegeconfidential.com/music-major/1120351-best-liberal-arts-university-with-best-music-program-p1.html for an idea of some great colleges with good music programs. There are a ton of choices. What else is he looking for in a school? Location, size, academics, aid?