Well, I hate to say this, but your friend was of sound mind and will when he told you about the station. It is indeed true. We once had a real Southern Pacific station here in P.G.. It was located near Lovers Point at what is now the mobile home park. It was quite extensive at the time.
As to history, Southern Pacific constructed a line from San Francisco down the peninsula all the way to Pacific Grove. It opened in 1880 and had stops along the way until the terminus here in P.G.
Nine years later the S.P. began a new train called the Del Monte Express. It left San Francisco mid afternoon and arrived here in the evening. Later the line was extended to Asilomar (the Whistle Stop) and on to a sand plant in what is now Pebble Beach. It ran until the late 1950’s.
This extension was most interesting in that the sand plant did not have enough space for the locomotive to turn around, so it would pick up a load of sand and then back all the way into P.G. where an ingenious “roundhouse” would spin the locomotive around so it would be headed in the right direction for San Francisco.
The old tracks into town are now the walking path along the bay from the Aquarium to Lovers Point. You can still see a replica of the Asilomar stop if you walk the rec trail north from Hayward Lumber.
Trivia – Do you know what old time San Franciscans called the ride down to Santa Cruz? The “Suntan Special” because it was usually foggy in the City and always sunny in Santa Cruz.