How would you react to civilians joking about the military and military related things?

I would ignore it. If one does not react than the other will end up tiring of getting a reaction. If I had a friend who persisted, I would look hard as to why I still have that person as a friend in the first place. No friend of mine has ever or will ever do something like that.

Using your example as a template, I'm somewhere in between the two options. I probably wouldn't immediately react, however, if the friend insisted on persisting, it would only be a matter of time before I'd say something to them. If the situation wasn't resolved by our little chat, then I'd wish my friend a good life and tell them I'd see them never. As the saying goes, with friends like that, who needs enemies?

There's plenty of jokes to be made about the military that don't bother me at all (what's long, hard an full of seamen). PTSD, however, isn't a joke, and if my friend tried to make one of it, I'd ideally provide some tactful education on the subject. Some people truthfully don't have an appreciation for how bad the symptoms can be, and they might actually appreciate to learn something instead of being a ignorant and possibly disrespectful of an actual problem. Granted doing so requires you to remain professional in how you explain how wrong the joke is. A decent human being will learn form the experience and try to improve themselves. If not, they aren't worth retaining as a friend (to me, at least).