What's the correct way to use 'schadenfreude' to describe a person who has/uses/suffers from it?
Schadenfreude is an emotion only the German language has a word for. Put simply it is a person enjoying someone else’s misfortune. It does not matter if its monetary, a divorce, a failed exam, or the person being yelled at by the boss… 

Link Definition:https://www.merriam-webster.com/dictionary/schadenfreude

Definitely not a mental illness. (for details on mental illness see ICD-10 Fxx.xy. Link: http://www.who.int/classifications/icd/en/)