It is not for any prophet to have captives until he hath made slaughter in the land. Ye desire the lure of this world and Allah desireth (for you) the Hereafter, and Allah is Mighty, Wise.
How many a township have We destroyed! As a raid by night, or while they slept at noon, Our terror came unto them.
Remember thy Lord inspired the angels (with the message): "I am with you: give firmness to the Believers: I will instil terror into the hearts of the Unbelievers: smite ye above their necks and smite all their finger-tips off them."
If thou comest on them in the war, deal with them so as to strike fear in those who are behind them, that haply they may remember.
And those of the People of the Book who aided them - Allah did take them down from their strongholds and cast terror into their hearts. (So that) some ye slew, and some ye made prisoners.
It is He Who got out the Unbelievers among the People of the Book from their homes at the first gathering (of the forces). Little did ye think that they would get out: And they thought that their fortresses would defend them from Allah! But the (Wrath of) Allah came to them from quarters from which they little expected (it), and cast terror into their hearts, so that they destroyed their dwellings by their own hands and the hands of the Believers, take warning, then, O ye with eyes (to see)!
Narrated Abu Huraira: Allah's Apostle said, "I have been sent with the shortest expressions bearing the widest meanings, and I have been made victorious with terror (cast in the hearts of the enemy), and while I was sleeping, the keys of the treasures of the world were brought to me and put in my hand." Abu Huraira added: Allah's Apostle has left the world and now you, people, are bringing out those treasures (i.e. the Prophet did not benefit by them).
Sahih Bukhari 4:52:220
Narrated Anas: The Prophet offered the Fajr Prayer near Khaibar when it was still dark and then said, "Allahu-Akbar! Khaibar is destroyed, for whenever we approach a (hostile) nation (to fight), then evil will be the morning for those who have been warned." Then the inhabitants of Khaibar came out running on the roads. The Prophet had their warriors killed, their offspring and woman taken as captives. Safiya was amongst the captives, She first came in the share of Dahya Alkali but later on she belonged to the Prophet . The Prophet made her manumission as her 'Mahr'.
Sahih Bukhari 5:59:512
Narrated Abu Huraira: The Prophet said, "I have been given the keys of eloquent speech and given victory with awe (cast into the hearts of the enemy), and while I was sleeping last night, the keys of the treasures of the earth were brought to me till they were put in my hand." Abu Huraira added: Allah's Apostle left (this world) and now you people are carrying those treasures from place to place.
Sahih Bukhari 9:87:127
Abu Huraira reported: The Messenger of Allah (may peace be upon him) said: I have been helped by terror (in the heart of the enemy); I have been given words which are concise but comprehensive in meaning; and while I was asleep I was brought the keys of the treasures of the earth which were placed in my hand.
Sahih Muslim 4:1066
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Quran does not approve of terrorism in any way. Not a single verse in the holy Quran supports terrorism. Many people mention verses from the Holy Book and pesent it as an evidence of terror breeding but what they dont see is that the context in which the verse was mentioned is different than normal conditions or cicumstances. Many people have learned the famous verse:
"Where ever you find a non muslim kill him............"
Few people would know that this chapter of the Holy Book speaks about the war instructions for the Muslims in the battle field. So this verse will not be under consideration in the normal scenerio. Similar misconceptions lead to an idea that Islam breeds and supports terrorism but it is very untrue and crazy idea.