There's a middle ground between telling someone they can do anything and telling someone they can't do anything. It can be hard to hit sometimes, but I think in their own way they're both equally damaging.

I do my best not to tell my friends they can't do X, though, just because I find it non-helpful, in addition to being hurtful. It doesn't mean I overpraise or lie, though; if they go on about wanting to do something that I think is unreasonable, it seems a lot more helpful and supportive to me to say something like 'Are you sure you want to do that?' or 'Maybe you should try X (Step One) first before you try to tackle that.'

That's just me, though, and I am the product of my own experiences.....