Okay well this was over MSN but she was doing that :$ embarassed/blushing smiley cuz she said something random and was blushing because she said something so random and I said "why are you blushing hah?" her response "because I said something so random :$" I just told her "aw haha don't be embarassed I find girls that aren't random to be boring " and her she does the whole AWW thing then she randomly does more blushing smileys and I ask "Why are you being so blushy now?" her response... "Cus ur cute :$" I HAD NO IDEA WHAT TO SAY BACK LMAO. I Just said ":O Thanks? haha <3" Like an idiot. I knew I should of done something better in my situation but I didn't want her to think I was taking so long to respond because she creeped me out haha. So what do I respond the next time she says that I'm Cute?

Just say "I know =P"
You don't always need to be overly witty or whatever, but you also don't want to bat her even though saying that you're cute isn't a REAL compliment (ie, it's a generic and therefore somewhat meaningless statement which girls tend to throw around)
So just smile and say "I know"

Alright true, any other responses you guys would have used?

Just say "Thank you" I think it's the best way to handle compliments. If you get too excited about them - she will think that you seek approval. If you offend her or make fun of her she will feel bad because she is just being nice to you. A confident man would say "Thank you" and continue with the conversation.
PS: You should definitely see a girl's response to compliments. It's really fun to watch their reactions when a guy they like compliments them and when a guy they don't like does the same thing. By observing the subtleties in their responses you can actually begin to understand when a girl likes you and is sexually attracted to you.

Never been called cute. So I wouldn't know. Cute is what a puppy is. Girls don't want to bang a puppy. At least the mentally healthy ones don't. When you are as good looking as me nobody tells you anything. They just automatically accept the fact that you know that you are f----- sexy. Girls usually look at me with eyes that are razor sharp. Hard to explain unless you have had the experience. Like something primal in them has come out. Maybe those are the ones in heat. I don't know.

So, read their body language and eyes. That is how you can tell if you are good looking. If you are good looking you will feel a girl's energy coming towards you. They almost never approach you. They just hang around you looking and praying that you come to them. I like to play with them. Pretend as if I am going to say something then I walk off in the opposite direction. I am a heart breaker I guess. Some girls seem to be happy if I just give them eye contact. That seems to be a big thing in some parts of the non-English speaking world. Girls try to get you (well at least get me) to catch them looking your way. Took me several trips before I caught onto their game.

I'd probably just say "Thanks" either by it's self or at a push with a smile/winking emoticon thing

Just say

"and youre hot "

or

You: "are you hitting on me"
HB: yes/no/blushes/whatever
You: "now that's cute "