Yes, it sounds like you did fine. I think it was okay to smile and wave goodbye. I mean, you laughed at his jokes, so why wouldn't you smile and wave goodbye?
Are the jokes he is telling something you feel is appropriate in a business setting? Do you engage in sexual jokes with other business associates, or customers? I believe it was a step in the right direction for you not to encourage him by engaging. Redirecting the focus back on business is the goal.
Yes, he continues to test. But he may see a new Magic who does not fall for those old tricks anymore.
Good job!
It is not about what you feel should work in your M. It is about doing the work that gets the right results. Do what works!
