It does not sound like this falls under FMLA. Even if it did, as long as you can prove they are part of an overall layoff and you are not singling them out due to having taken FMLA, you should be okay.
I would make their term date the same as everyone elses unless there is anything in the leave paperwork that guarantees them a job through the return date...anything that makes it more of a contract. You might have an attorney look over the leave paperwork to be sure that it does not.
As to the vacation negative balance, what have you done in the past where employees have terminated and been in the negative? We allow our employees to use time at the beginning of the year but do not ask that it be repaid at termination. We have yet to have anyone (since we setup the policy) take advantage. Plus obviously this employee wasn't taking advantage. He/she had no way of knowing that there would be a layoff. And unless he/she is still getting paid and/or due a final paycheck, it will be hard to recover. This is one of the negatives of a policy that allows use before earning. Are you paying severance? Will there be enough to deduct?