Wait -- this Ayers person was never convicted? And he's been given awards for his activities in community service?
Well, OJ was never convicted, either. (Until recently)
But Ayers was, and is, an unrepentant political activist. He believed, and apparently still believes, that violence is an acceptable response to a repressive government. That's actually a very American tradition; if you'll remember, that's how our country was founded in the first place.
A lot of these sixties radicals mellowed as they grew older. They got married. They had kids. Simply put, they grew older. Youth is a time of both innovation and excess. Revolutions are accomplished not by old men with beards, but by young men (also with beards) in their twenties. Lenin was 25 when first arrested for his political activities. Leon Trotsky was held in jail for two years. He was nineteen at the time.
Many radicals, while not giving up their beliefs, have publicly renounced the violence of their earlier days. But few of them regret it, I would wager. Bill Ayers was not trying to bring down the government; he was trying to end the Vietnam war through violent political protest. Thus his famous (and stupid) statement that he regrets not having done more. They simply came to understand it was not an effective strategy for change, not in the US.
So, being still interested in social change, they became lawyers, social activists, and community organizers. And some, in that role, became quite effective -- such as Bill Ayers. He became part of mainstream Chicago politics, and did a lot of good for the underprivileged there. And a lot of people were more interested in whether he could help them get funding for a school now than what he might have done in the past. So, Obama, along with many, many other Chicago pols, came in contact with him in various ways during their careers.
Now, if you believe that Ayers' actions were unforgivable, that whatever he does now doesn't wipe away his past, and that no one, including Obama, should have ever dealt with him in any way, that's a defensible point of view.
But to cast it as "Obama associates with terrorists" and can't be trusted is absolute nonsense.