You have written what Jody said to Pete smiling. That’s a good way to show some happiness and reunion in your story. You can also add some punctuation and quotation marks to make it easier to read. For example, you can write:
“Chap, how are you doing? It’s been a while since we last spoke. What can I do for you?” the headmaster said. “Yes, come round now in person, Mr Potter,” he added. So Mr Potter came in person to see Pete happily on foot. Mr Potter, the chief headmaster, said to Pete kindly, “Hello, Pete. I’m glad to see you. How are you feeling today?” “Sad,” said Pete. “I wish I had Jody here. I like her, Mr Potter.” Mr Potter felt sorry for Pete. He knew that Jody was one of the children who had gone to the Isle of Wight with Mr Majeika. He decided to do something nice for Pete. He fetched Jody on his motorbike and said to her, “Jody, I have a surprise for you. There’s someone who wants to see you very much. Can you guess who it is?” “It’s Pete!” said Jody, smiling. She was at home with her dad. She missed the Isle of Wight, but she missed Pete more. She hugged Mr Potter and thanked him for bringing her to see Pete. I like your school blouse Jody said Pete smiling to him and Jody reached for his hand and said nicely to him