a participant in a 401(k) rolled his balance into an ira when he left the employer. now, after surrender fees have passed, he wants to roll this ira into another ira that he has set up. is this ok??????

Yes

I would use the direct custodian to custodian approach so there are not questions and no 60 day clock. It is often the easiest way to get the job done.

Do not be surprised if this custodian also charges an exit fee! You may find that the third location will offer to rebate the close out fee if you ask.