"OK" on its own would be a slightly odd (and slightly rude) response. But depending on what you're being thanked for, you could possibly respond with "That's OK".

You can say 'it's okay', but if you just say 'okay' on its own people will think you are rude. A simple 'no problem', or 'you're welcome' should suffice.

Not necessarily- it sounds weird and awkward. The usual response would be, "you're welcome," "no problem" or even "anytime."

I don't think this is wrong, it's just kinda rude