The Terror Squad is sent after Sean when the alarm level reaches 4. This can happen before they first appear in the story.
The Terror Squad apparently made a bloody reputation on the Eastern front according to Bryman. After rescuing Maria Kessler, they become much more common, being frequently encountered on later missons and patrol the zeppelin refueling station in the Seine.
The Terror Squad is frequently found in groups of 2-4, and usualy carry the Terror MP60 or the Terror Flammenwerfer. Occasionally, a second terror model, the Terror Squad commander, which are armed with the Terror shotgun, will charge towards the player.
The Terror Squad uses their superior health and weapons to charge the player down while causing severe damage to the player. This can be used to your advantage by placing explosive along a path and then luring the charging Terror Squad soldiers to their deaths. Sean cannot stealth kill or sucker punch a Terror Soldier.