It is not your responsibility to pay off his DEBTS. If you do that willingly, you will be rewarded. As for his punishment, if he had the intention not to return it or he had the means to give it back but didn’t, he will be punished.

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No, it only must be given in form of money.

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No, it doesn’t but it is best to redo the wudhu just to be safe.

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This is not permissible. You can invite them to your house for the purpose of dawah but you are not allowed to go to their festival and you must not have best friends from non muslims.

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