How do we construct the cotangent space? I am following a graduate course in algebraic geometry and our professor introduced last week the cotangent space at a point p of a variety as the quotient $m/m^2$ where $m$ is the maximal ideal of the local ring at the point p. This is completely clear to me.
He then proceeded to explain some equivalent definitions in differential geometry, which I understood much less, given that I have just followed a quite easy introductory course.
First off he said that in general we have a map $d: C(V)\rightarrow M$, where $M$ is the cotangent space of all vector fields and $C(V)$ the smooth functions on the manifold, which sends $f\mapsto df$. He called $df$ "the one form df" and gave no further explanation as to what it is, which is not clear to me. I especially don't understand how it acts on the space of all vector fields.
He then went on to say that the cotangent space of all vector fields could also be defined to be generated by the elements "of the form dr" with r an element of the ring of continuous functions, imposing the relations given by Leibniz rule on them.
In the end he said that the same construction could be made by tensoring the ring of continuous with itself and then quotient out by an appropriate ideal. Not having understood what came before, this remained mysterious.
There is a lot of confusion in my mind right now and if you could clarify even a little bit of this definitions it would help me greatly.
 A: Your professor seems not to emphasize sufficiently the contrast between the cotangent space to an affine variety and the cotangent space to a general variety.
I'll examine the classical case of varieties over an algebraically closed field (the generalization to schemes is not so difficult but attention must then be given to the distinction between point, closed point and rational point).
A) For a general variety $V$ and a point $p\in V$, we consider the local ring $\mathcal O_{V,p}$ and its maximal ideal $\mathfrak m_p\subset \mathcal O_{V,p}$.
The cotangent $k$-vector space is $T^*_p(V)=\frac {\frak m_p}{\frak m_p^2}$.
Given the germ $\phi=\tilde f\in \mathcal O_{V,p}$ of a regular function $f\in\mathcal O(U)$ defined in an open neighbourhood $U$ of $p$, the differential of $f$ or $\phi$ at $p$ is $$d_pf=d_p\phi=[f-f(p)]\in   \frac {\frak m_p}{\frak m_p^2}             $$
Note carefully that it is absolutely impossible to define $T^*_p(V)$ in terms of the global regular functions $\mathcal O(V)$ or in terms of the global tangent vector fields $\mathcal X(V)=\Gamma(V,T(V))$.
B) However in the case of an affine variety $V$ with algebra of global functions $A:=\mathcal O(V)$ we can use the global regular functions $A$ to define the cotangent vectorspace at $p$ of $V$. Here is how:
Define $M_p\subset A$ to be the ideal of global functions $g\in A$ such that $g(p)=0$.
We have a canonical morphism restriction map $r:\frac {M_p}{M_p^2}\to \frac {\frak m_p}{\frak m_p^2}$ and this morphism is bijective.
Hence the transposed morphism $r^*:(\frac {\frak m_p}{\frak m_p^2})^*\to (\frac {M_p}{M_p^2})^*$ is also an isomorphism (of $k$-vector spaces) and this allows us to define, if one so wishes, $T^*_p(V)=\frac {M_p}{M_p^2}$.
C) Everything above remains correct if one replaces affine varieties by differential manifolds.
Hence in the excellent manifold theory books by Tu  and Lee they define the cotangent space to the manifold $M$ by using the $\mathbb R$-algebra of global differentiable functions $C^\infty(M)$, in the spirit of the procedure described in B).
There should be more publicity about the close similarity between differential manifolds and affine algebraic varieties (and the vast gap between differential manifolds and projective algebraic varieties).
A: Question: "First off he said that in general we have a map d:C(V)→M, where M is the cotangent space of all vector fields and C(V) the smooth functions on the manifold, which sends f↦df. He called df "the one form df" and gave no further explanation as to what it is, which is not clear to me. I especially don't understand how it acts on the space of all vector fields."
Answer: When speaking of tangent and cotangent spaces, these notions are defined in terms of the local ring hence you may assyme your scheme is an affine scheme.
If $k$ is a field  and $X:=Spec(A)$ is an affine scheme of finite type over $k$, there is a canonical map
$$D: \mathcal{O}_X \rightarrow \Omega^1_{X/k}$$
of sheaves of abelian groups. Here $\Omega^1_{X/k}$ is the sheafification of the module $\Omega^1_{A/k}:=I/I^2$ of Kahler differentials of $A/k$.
Question: "In the end he said that the same construction could be made by tensoring the ring of continuous with itself and then quotient out by an appropriate ideal. Not having understood what came before, this remained mysterious. There is a lot of confusion in my mind right now and if you could clarify even a little bit of this definitions it would help me greatly."
If $m:A\otimes_k A \rightarrow A$ is the multiplication map it follows $I:=ker(m)$ and there is a canonical map
$$d:A \rightarrow \Omega^1_{A/k}$$
defined by $da:=1\otimes a-a\otimes 1.$ The map $D$ is the sheafification of $d$. When $\mathfrak{m} \subseteq A$ is a $k$-rational point it follows the fiber
satisfies
$$\phi:\Omega^1_{X/k}(\mathfrak{m}) \cong \mathfrak{m}/\mathfrak{m}^2.$$
The map $\phi$ is an isomorphism of $k$-vector spaces. There is a canonical map
$$\psi:\Omega^1_{A/k} \rightarrow \Omega^1_{A/k}\otimes_A \kappa(\mathfrak{m}):= \Omega^1_{X/k}(\mathfrak{m})  $$
defined by $\psi(\eta):=\eta \otimes 1$. This is the map your lecturer speaks about.
You map a global section $s\in A$ to the element $\psi(ds):=ds\otimes 1 \in \mathfrak{m}/\mathfrak{m}^2$.
Example: If $\mathfrak{m}_x:=(x_1-a_1,..,x_n-a_n) \subseteq A:=k[x_i]/I(X)$ it follows any section $s\in A$ may be written as
$$s(x_1,..,x_n)=s(a_1,..,a_n)+\sum_i \frac{\partial s}{\partial_{x_i}}(x)(x_i-a_1) + \text{higher order terms}.$$
Hence the term $s(x_i)-s(a_i)$ is in the ideal $\mathfrak{m}_x$. You get canonically an element
$$\overline{s(x_i)-s(a_i)} \in \mathfrak{m}_x/\mathfrak{m}_x^2.$$
Question: "First off he said that in general we have a map d:C(V)→M, where M is the cotangent space of all vector fields and C(V) the smooth functions on the manifold, which sends f↦df. He called df "the one form df" and gave no further explanation as to what it is, which is not clear to me. I especially don't understand how it acts on the space of all vector fields."
This gives a map
$$d_x:\Gamma(X,\mathcal{O}_X)\cong A \rightarrow \mathfrak{m}_x/\mathfrak{m}_x^2.$$
In general for any $Y/k$ there is for any point $x\in Y(k)$ a map
$$d_x: \Gamma(Y, \mathcal{O}_Y) \rightarrow \Omega^1_{Y/k}\otimes \kappa(x) \cong \mathfrak{m}_x/\mathfrak{m}_x^2$$
defined by
$$d_x(s):=d(s_U)\otimes 1$$
where $x\in U:=Spec(A) \subseteq Y$ is an open affine subscheme containing $x$.
Quesiton: "He then went on to say that the cotangent space of all vector fields could also be defined to be generated by the elements "of the form dr" with r an element of the ring of continuous functions, imposing the relations given by Leibniz rule on them."
Answer: The module of vector fields is dual to the module of Kahler differentials:
$$Der_k(A) \cong Hom_A(\Omega^1_{A/k},A).$$
You may define $\Omega^1_{A/k}:= \oplus_{b\in A} Adb/C$ where $C$ is the $A$-submodule generated by $d(\alpha)$ for $\alpha \in k$, $d(a+b)-da-db$ and $d(ab)-adb-bda, a,b \in A$.
See Matsumura's book, "Commutative ring theory" for an introduction.
