A person at my playgroup has said that if a character is KOed you can't bring it back into the game. This was concerning the Ant Man boxed set. He said that when they're KOed they don't go back to your sideline, therefore, you can't switch to that one anymore.

Does the same apply to generated characters? Do they begin on my sideline? Example: Friends of Humanity and Sentinels generated by Bolivar Trask? I have 4 Sentinels. Does this mean that once they're dead I'm out of units to bring in?

These are relevant portions of the Rulebook you should know..

Some effects allow you to bring a specific game element from “outside the game” into the game. When such an effect instructs you to do so, it uses the term generate. When something is generated, the effect and/or card
specifies exactly what is being generated.

Like “named” tokens, generated game elements are always specific to the game element whose effect brought them into the game, even if the generated game elements share the same name. If more than one character
generates the same game element, you are required to track which game elements were generated by which.

STARTING FORCE
Your starting force is the force you build during force construction and contains all game elements that you begin the game with on (and more rarely, off) the map, but does not include your starting Sideline. Game elements that join your force later from your Sideline, from outside
the game, or from an opponent’s force are not part of your starting force. A starting force must include at least one character that isn’t a bystander.

So the generated figures are from --Outside the Game.

Thank you kindly for the response. We understand those rules just fine.

I'm looking for the rule that my fellow player is quoting. He is stating that when a character is KOed, It's put in you KO area and, as such, is not "outside of the game". Therefore it can not be generated a second time.

Thank you kindly for the help.

From the Comprehensive Rulebook Supplement, page 6:

KO AREA
If an effect allows you to generate a game element from
“outside the game” and you don’t have any more physical
copies, you are allowed to remove them from the KO area
and use that physical piece again, noting its previous KO.

Thank you, kindly. That's exactly what I was looking for!

Just to clarify, the Ant-Man Trait is a 'replacement' effect, and replacement characters need to be on the Sideline, so yes, if you ran multiple Ant-Man characters on your force, whoever gets KO'd is in your KO area and can't be used as a replacement character any more.

Regarding the other effects such as the Friends and Sentinels, those are different and come from outside the game as was stated, and can also come from the KO area, as stated.