Heard Chris Matthews discuss the Presidential salute a couple of weeks ago. Per him, until Reagan, Presidents, as a rule, didn't return salutes. He said, due to the fact the president isn't active military in addition to wanting to secure/promote the appearance the President is a civilian leader, Presidents didn't return salutes.
Those who serve are taught the salute is a "courtesy". Being a veteran, I guess Reagan may have believed it was rude not to return the salute. Also, since the president is commander in chief, it's certainly justified.
Bottom line: it can go either way. There's no set protocol for the Presidential salute.