Difficult student would dispute every grade in the course and now wants letter of recommendation I had a student in one of my courses that for every graded assignment would come to me and challenge the grade given, even though I provided a rubric to show exactly why the points where taken off. 

For one of the last assignments, which was a class presentation, this student went off into another topic and for half of the presentation time essentially filled the time with an interesting topic, that unfortunately, although interesting, was not what the assignment for the presentation required. There were other problems with the presentation, which I outlined in the rubric, but twice the student came to me to challenge the grade, because they "worked so hard on the presentation," and that they "did cover what was required" and did not deserve a B (which in retrospect, should have been a C), I explained why again the student got the grade they deserved...and after a while the student saying that they did not agree, left. 

But then on the following class, the student came to talk to me about their grade again and was even somewhat aggressive towards me, and very confrontational raising their tone of voice and won't give up on the point that s/he deserved an A. I said that I would be happy to grade the presentation again, but that I was often very lenient and that the grade could either improve/or decrease if I were to grade it again. The student then gave up, and said that s/he would focus then on the final paper and asked whether I give full points (100) in the final paper, to which I replied, "yes, if you exceed my expectations." (haven't graded this assignment yet). 

Well, a week went by and then this student asks me for a letter of recommendation! Granted s/he currently have a A- in my course, but after the way the student spoke to me, with complete lack of respect, I was very surprised that s/he would ask for a letter. 

...and at first the student did not want to waive their rights to the letter, claiming that we had to sign the page "together" whenever they would pick up the letter. I explained that the student could actually fill out the top part, if s/he wanted to waive the rights, and I would fill out the bottom part, include the form with the letter in a sealed envelope. But that if s/he did not want to waive the rights, that would be fine as well, and I would just sign the bottom part...then the student decided it would be best to waive their rights...

I am now in the process of writing the letter and was wondering if anyone was ever put in the same situation, and what did you do? This is a good student, however, clearly lacks respect for their professors. Any advice/guidance/help? How/Should I mentioned this in the letter?
It sounds like you've agreed to write a letter so I think you are committed unless the student releases you from your commitment.  (Personally, I'd have said no in the first place and explained if asked that, based on their behavior, I could not honestly give a favorable recommendation.  But that ship has sailed.)

But what you haven't agreed to yet, I hope, is a favorable letter.  What I would do in your situation is contact the student to explain that on reflection, you've become concerned that the only honest letter you can write will not be helpful.  You don't feel you can honestly ignore that the student is a difficult, argumentative, confrontational and disrespectful individual.  To be an honest appraisal, that has to go in there.  You cannot write an honest letter that only recites the good stuff.

At that point, you can ask, do they still want the letter?  I'm sure they'll be difficult and disrespectful once again but that's nothing new and if you stand your ground, I think they'll decide to go elsewhere.  Problem solved.  (And maybe they'll learn something from the experience, though, from what you describe, probably not.)