I've worked and finished Olive Wood for furniture, but I'm pretty clueless when it comes to turning. Olive Wood is only very slightly oily, it's no where near as oily as Rosewood for example. I've never found Olive presents any serious finishing problems and doesn't require any pre-sealing or cleaning off with thinners before finishing. The interlocked grain of Olive can cause patches of micro tear out which may only be revealed under a finish if you haven't checked carefully beforehand, but that's a preparation issue rather than a finishing issue.
I'm not very familiar with "friction polishing", but my guess is that the fault lies with your final sanding, general technique, or finishing materials rather than with the timber itself. I'd strip the failed finish off, check the surface with your fingertips for any localised roughness, and then try again with fresh materials.
Good luck!