A method to treat frictional contact problems along embedded surfaces in the finite element framework is developed. Arbitrarily shaped embedded surfaces, cutting through finite element meshes, are handled by the X-FEM. The frictional contact problem is solved using the monolithic augmented Lagrangian method within the mortar framework which was adapted for handling embedded surfaces. We report that the resulting mixed formulation is prone to mesh locking in case of high elastic and mesh density contrasts across the contact interface. The mesh locking manifests itself in spurious stress oscillations in the vicinity of the contact interface. We demonstrate that in the classical patch test, these oscillations can be removed simply by using triangular blending elements. In a more general case, the triangulation is shown inefficient, therefore stabilization of the problem is achieved by adopting a recently proposed coarse-graining interpolation of Lagrange multipliers. Moreover, we demonstrate that the coarse-graining is also beneficial for the classical mortar method to avoid spurious oscillations for contact interfaces with high elastic contrast. The performance of this novel method, called MorteX, is demonstrated on several examples which show as accurate treatment of frictional contact along embedded surfaces as the classical mortar method along boundary fitted surfaces.