What is the mechanism for when the fed purchases a gov't or corporate bond from a non bank?

When the Fed buys a bond as part of a Quantitative easing program, they execute with Primary Dealers through a website interface. Hedge funds do not execute directly with the Fed, although they could execute with a Primary dealer who executes with the Fed.

When the Fed executes with a primary dealer, it credits the account of the primary dealer using newly created funds. The dealer deposits the fund in a bank account, which increases bank reserves in the system.