Is there a maximum natural armour a medium sized character can have?
I don't know of any specific limits, although I have a slight recollection that there used to be recommended limits based on size or CR.
I have generated a human half dragon lycanthrope werewolf using the wolf stats with the simple advanced template and it has resulted in a +10 natural armour in hybrid form. In my current campaign the advanced wolf is justified, but I am not sure if there are any specific limits to size
Rules-as-written, I'm not 100% certain that an advanced creature can be used as the 'base animal' for a lycanthrope. The rules talk about a type of animal not a specific animal that might have a template applied.
The use of an advanced might be justified on basis of the campaign, but that doesn't really exonerate you from maintaining balance. Is a +2 bonus to natural armor unbalancing? It's a game changer given all the other bonus, but I'm not really convinced it's a game breaker.