It's a grey area - sorta - it's illegal, but is it morally wrong?
It's illegal to buy or borrow a CD and record it to a tape or blank CD for your own use, let alone make copies for your friends or sell it.
The man who is making a mix tape is still breaking the law, but it's not as wrong as criminals selling pirate CDs, VCDs, games etc - what else are these people selling or involved in?
About 90% of my downloaded MP3s are of songs that have long been deleted by the record company and are nigh on *impossible* to find elsewhere (other than maybe searching second-hand record stores for 10 years straight and the company wouldn't see a penny from that either). Of the other 10% it's a mix of things I already own and stuff I plan on getting in the very near future (checking if like the album tracks etc) and only keep temporarily.
People have been making compilations for each other for as long as there has been recordable media. I don't think it's *bad* unless there's money changing hands.
If I was making a CD for an elder, I'd make sure all the files were converted to .wav so it'd play in a regular CD player, not just on a computer, and never mention the words "MP3" of "Internet".
A few weeks ago an elderette told me I was daft for buying original DVDs when "you can get VCDs so cheaply"!