PP&M are a good example of two guitars, and the Everly Brothers also used two guitars to good effect. Not to forget the Beatles, and many other 60's pop groups, who based their sounds on the interplay of two guitars.

The basic paradigm for two guitars is "Lead and Rhythm", which is to say, one person plays the chords, while the other plays melody, fills, and turnarounds.

Another way to look at it, and one that opens more possibilities, is simple to say that each player stakes out a territory--Vertically, as "When I am playing Bass notes, you play chords in middle range, or high range", for instance, or Horizontally, as in"When I play quarter notes, you play whole note chords, or when I play that catchy rhythmic phrase in chords, you answer back to fill out the measure.", for instance.

The problem you have is that your new guitarist's style doesn't compliment what you brother is doing, and your brother can't tell him how to change it so it does. The choices are to either work things out, or find someone who knows what to do.