Rule Question

Question
During a league match a player hit his ball deep into a large wooded area on course property.  The area is NOT marked as a hazard, as there are no red, yellow or white stakes.  We were able to find and clearly identify his ball.  However there was no way he could take a swing and advance the ball.  Because we did find it and it was not in a marked hazard or out of bounds we were unclear of his options.  We though that he could drop with a one stroke penalty as far back as he wanted on a straight line keeping the point his ball rested and the hole on the same line. But that line never got him out of the woods and would only make things worse.  We knew he could take an unplayable lie and were not sure if was one or two club lengths. Either way that was no help.  He ended up playing it like a lost ball and re played from his pervious spot (tee box).   Did he have any other options?

Answer
Hello Chris:
Thanks for asking this question.
I think that you and friend did the right thing.  This is almost the exact case of what happened at one of PGA last year.  Kevin Na was in this situation and decided to hit the ball to get out of wood, but he ended up 10 or 12 Shots in this single hole. PGA history.
Hit again at the tee box was right decision.  Thanks for very clear description.