Can I use "that" instead of "what"?

What does "in return" mean?

"In return" means to get or give something in exchange for another thing. Ex: They paid the man in return for his work. Ex: What can we do in return for your kindness?

What's "looking" mean here?

Here, "looking" is an adjective which means to have a specific appearance. If you want to describe the appearance of someone or something, you can use an adjective and "looking." Ex: That's an ugly-looking car. = That car has an ugly appearance. Ex: Those actors make a good-looking couple.

Why's it "was" instead of "were?"

Grammatically, "were" would be correct here, but this way of speaking is fairly common in some places in the USA, and is considered to be more accepted now than before. Eminem uses "AAVE" in his song lyrics, African-American Vernacular English, which is a way of speaking English that has developed among African-Americans due to various complexities and often includes differences like this. Ex: We was going to the shops to get some ice cream. Ex: I don't need nothing like that. => anything = nothing

Is "with" necessary here? I thought it is okay to say just "I'd like to present you a gift".

"With" is not necessary here, however, it sounds a little unnatural if you take it out and don't have any preposition. Instead, you could say "I'd like to present to you a gift" or "I'd like to present a gift to you", although both of these sound a bit more formal than the original sentence. So although "with" is not necessary here, it sounds the most natural to use.

What does "[something]'s up on the cloud" mean? Is it an idiom?

It is an idiom! The common phrase is someone's "head is in the clouds". If one's "head is in the clouds", it means they are disconnected from reality. They daydream a lot and live in their imagination. It's said as a criticism since they can be unaware of what is happening around them. Ex: Sorry, I had my head in the clouds. I'm listening now. Ex: Julia's head is always stuck in the clouds. Ex: You got your head in the clouds? Pay attention!