I think it'll just show that it's going back to the original sending location. I never exactly check the tracking online before for rejected pos ekspress parcel.
But I know like in Poslaju, they'll put where the parcel is located, say you send from KL to Penang - 1st day in KL, 2nd day in Penang, if 3rd day send back to KL then you know what happen lor.

And yea, if flat CD like that, just put into their envelop. They usually don't bend it. If kembang little bit, depends on how thick the kembang is. Each envelop got their limit. If it's the RM4.50 one, kembang little bit is ok. But if RM3.50 one might have some problems.
If the person that the parcel was delivered to refuse to accept the delivery, in other words, he tells the postman and insist that there's no such person residing in that address, then they'll return it to sender, that is if you provided a sender address and contact details la.

This is based on my one and only experience where my buyer give me wrong address and inform me few days later that he gave wrong address. The parcel was returned to me within the next few days after he informed me.