When a program doesn't respond, on a low level (maybe even down to cpu instructions), what exactly happens? Does the cpu scheduler fail to get a response from the cpu on whether the program executed correctly?
The cpu knows nothing about "programs". If cpu instructions do not operate correctly, there is a hardware failure, not a software (program) failure. Program non-response refers to a buggy program not behaving as expected, e.g., not responding to OS window messages, or failing to clear i/o completion interrupts, or getting stuck in an infinite loop, etc.