(b)
We have $x'=0$ or $y'=x_{0}$.
In the first case, $\lambda ^{\mathsf{Sets}_{*}}_{X}$ clearly sends both elements to the same element in $X$. Meanwhile, in the latter case both elements are equal to the basepoint $0\wedge x_{0}$ of $S^{0}\wedge X$, which gets sent to the basepoint $x_{0}$ of $X$.
Being a Morphism of Pointed Sets
As just mentioned, we have
\[ \lambda ^{\mathsf{Sets}_{*}}_{X}(0\wedge x_{0})\mathrel {\smash {\overset {\mathclap {\scriptscriptstyle \text{def}}}=}}x_{0}, \]
and thus $\lambda ^{\mathsf{Sets}_{*}}_{X}$ is a morphism of pointed sets.
Invertibility
The inverse of $\lambda ^{\mathsf{Sets}_{*}}_{X}$ is the morphism
\[ \lambda ^{\mathsf{Sets}_{*},-1}_{X}\colon X\overset {\scriptstyle \mathord {\sim }}{\dashrightarrow }S^{0}\wedge X \]
defined by
\[ \lambda ^{\mathsf{Sets}_{*},-1}_{X}(x)\mathrel {\smash {\overset {\mathclap {\scriptscriptstyle \text{def}}}=}}1\wedge x \]
for each $x\in X$. Indeed:
-
1.
Invertibility I. We have
\begin{align*} [\lambda ^{\mathsf{Sets}_{*},-1}_{X}\circ \lambda ^{\mathsf{Sets}_{*}}_{X}](0\wedge x) & = \lambda ^{\mathsf{Sets}_{*},-1}_{X}(\lambda ^{\mathsf{Sets}_{*}}_{X}(0\wedge x))\\ & = \lambda ^{\mathsf{Sets}_{*},-1}_{X}(x_{0})\\ & = 1\wedge x_{0}\\ & = 0\wedge x, \end{align*}
and
\begin{align*} [\lambda ^{\mathsf{Sets}_{*},-1}_{X}\circ \lambda ^{\mathsf{Sets}_{*}}_{X}](1\wedge x) & = \lambda ^{\mathsf{Sets}_{*},-1}_{X}(\lambda ^{\mathsf{Sets}_{*}}_{X}(1\wedge x))\\ & = \lambda ^{\mathsf{Sets}_{*},-1}_{X}(x)\\ & = 1\wedge x \end{align*}
for each $x\in X$, and thus we have
\[ \lambda ^{\mathsf{Sets}_{*},-1}_{X}\circ \lambda ^{\mathsf{Sets}_{*}}_{X}=\operatorname {\mathrm{id}}_{S^{0}\wedge X}. \]
-
2.
Invertibility II. We have
\begin{align*} [\lambda ^{\mathsf{Sets}_{*}}_{X}\circ \lambda ^{\mathsf{Sets}_{*},-1}_{X}](x) & = \lambda ^{\mathsf{Sets}_{*}}_{X}(\lambda ^{\mathsf{Sets}_{*},-1}_{X}(x))\\ & = \lambda ^{\mathsf{Sets}_{*},-1}_{X}(1\wedge x)\\ & = x \end{align*}
for each $x\in X$, and thus we have
\[ \lambda ^{\mathsf{Sets}_{*}}_{X}\circ \lambda ^{\mathsf{Sets}_{*},-1}_{X}=\operatorname {\mathrm{id}}_{X}. \]
This shows $\lambda ^{\mathsf{Sets}_{*}}_{X}$ to be invertible.
Naturality
We need to show that, given a morphism of pointed sets
\[ f\colon (X,x_{0})\to (Y,y_{0}), \]
the diagram
commutes. Indeed, this diagram acts on elements as
and
and hence indeed commutes, showing $\lambda ^{\mathsf{Sets}_{*}}$ to be a natural transformation.
Being a Natural Isomorphism
Since $\lambda ^{\mathsf{Sets}_{*}}$ is natural and $\lambda ^{\mathsf{Sets}_{*},-1}$ is a componentwise inverse to $\lambda ^{\mathsf{Sets}_{*}}$, it follows from
Chapter 11: Categories,
Item 2 of
Proposition 11.9.7.1.2 that $\lambda ^{\mathsf{Sets}_{*},-1}$ is also natural. Thus $\lambda ^{\mathsf{Sets}_{*}}$ is a natural isomorphism.