How do we return greetings to non-Muslims if they say "As-salamu alaykum"? And did the Prophet's reply to the Jew with "Wa alaykum" mean a general rule or was it specific to the case of their ill-intentioned supplication?

If it is confirmed that a disbeliever said, "As-saamu 'alaykum" (Death be upon you) or if there is doubt about what he said, then the response should only be "wa 'alaykum" (And upon you). However, if it is confirmed that he said, "As-salamu 'alaykum" (Peace be upon you), then the response should be "Wa 'alaykum As-salam" (And upon you be peace), due to the Almighty's saying: (And when you are greeted with a greeting, greet [in return] with one better than it or [at least] return it [in a like manner]). Some scholars are of the opinion that one should only say "wa 'alaykum" based on the general prophetic traditions that command this. Some Shafi'is, however, permit saying " 'alaykum As-salam" without adding "wa rahmatu Allah" (and Allah's mercy).