The /Applications/ folder is scanned to a depth of 3, so it should
find Terminal just fine. You can see this by Opening the catalog,
selecting Applications on the left and then in the right pane select
the Applications that appears there. Hit the i button on the bottom
to open the drawer, look in the Source Options tab. This is read
only so things are greyed out but you can see the settings. To create
an editable clone of this, instructions are in the catalog section of
the manual.
http://mysite.verizon.net/hmelman/Quicksilver.pdf I have Finder in my catalog because I have Running Applications and
Processes checked. BTW it's in /System/Library/CoreServices/
Finder.app, you could add the folder as another catalog source if you
want. I've never wanted bring it up in QS before. I would typical
select a folder directly and use the Open action. What do you
typically do by selecting Finder in the first pane?
Howard