I have become "friends" with someone on-line and he keeps asking me to go pick up a money wire transfer and purchase bitcoin with it, then send him a picture of the bitcoin receipt. I've done it once for $200, now he's asking me to do it again and this time it's supposedly for $1,000. Now I'm getting suspicious. Could this be a scam?
Yes, it could be a scam. In fact, I will go further and say it is a scam and you should cut off all contact with this person (or team of people masquerading as a person) and not engage any further.
Most likely the wire transfer has come from an account that does not belong to the scammer but another of his/their victims, it is a way for the scammer to get "clean money" with no traceability back to the crime. Indeed, if the police are pursuing the crime they will end up at your door.
Also, when you cut off contact, be warned that the scammer will likely turn nasty, threatening to report you to police / FBI etc. Ignore it all, the last thing they want to do is bring law enforcement into it.
Unfortunately for you, Bitcoin transactions are easily tracked, especially when a Bitcoin mixer has not been used to increase the anonymity of the Bitcoins. You bought Bitcoins for this person. This person could then use the Bitcoins to buy illegal things. If law enforcement investigates the trail of Bitcoin transactions starting from the purchase of illegal things, they may eventually find the place where you bought Bitcoin using cash/credit card. This leads them to you.
Stop buying Bitcoins on behalf of anonymous people; there could be electronic and paper trails that lead to you.