Fazal,
If you check SDF sales doc control in vov8 and check in General Control you will see an Option called "Reference Mandatory" Which is Marked as C (with reference to Sales Order) Which means if you try to Create SDF with reference to Sale order then items will be copied automatically in line Items.So copy control 304 in VTAA is set respectively.
Whereas you are trying to Create SDF wrt Return Order so you'll have set your copy control requirement as303 which will work for both cases either with reference to sales order or Return Order.
Just try it with both scenarios by maintaining requirement as 303 you'll see your items will be copied.
For your other questions.
1. Retrun process will run either way because customer is sending the goods back and you can't wait for him to settle the payments for faulty goods first and then run the Return process, secondly its FI process how they manage with this case.
2. Pricing in return order will be there to maintain Ledger accounts. because goods are again being sent so reducing out of actually stock of MM and faulty goods are coming back but being main in faulty stock. Later on Its FI job how they adjust the payments and balance against new goods issued. So pricing will hit to keep company's internet process transparent. Otherwise goods could have been issued as Sample sale or Free goods too.
Dear SCN Members please advice if my answer requires any further correction.
Thanks
Zishan