When an “armed group” is fighting a war against another one, trying to conquer a country, they are an army. Their basic feature is quite obvious: an army, at any moment during the “conflict”, seizes the power over a certain territory. They RULE there, and they aim at conquering all the country.
A terrorist group, on the other hand, never tries to defeat military the enemy: their basic aim is to bring down their moral, they want to discourage, to disappoint the “occupation army”.
Terrorism is simply a form of psycological war, which can exist along with conventional war, as it happened with partisans under Nazi occupation in many European countries.
Of course, ETA is a terrorist group, they never dreamed about defeating and kicking the Spanish army out of “Euskal Herria”. All they wanted is to provoke certain reactions in the Spanish government and Spanish people.
At first they thought that terrorist attacks would push Spaniards to a violent breakdown against Basque civilians, and thus bring out a general uprising of Basques. It is obvious their strategy failed, and now they...well, who knows what the heck are they trying to achieve now?
On the other hand, it is funny that ETA, at first, didn`t refuse at all to define themselves as terrorists. Read Federico Krutwig and you will see that I am no lying on this. He strongly supported terrorism as a valid form of fight, and wrote that no mercy should be held to the enemy: he said torture against Spanish soldiers was OK whenever Basque warriors had the chance. Today, ETA activists seem quite aware that this sort of opinions are not too popular.
It is obvious Spanish media are strongly biased in this question, they have censored many facts along the years so that Spaniards don`t have a balanced view on the Basque issue. For instance, why do they always (ALWAYS!!!) refer to ETA as “La Banda Terrorista ETA”? Do they fear that listeners mistook with “The pipers band ETA?” Obviously, Spanish journalist are following some agenda on this issue.
I regard myself as anti-Spanish, I don`t like the post-Franquist regime, I spit at the current monarchy and the 1978 Constitucion, I would love to see a fair referendum in the Basque country or anywhere people asked for it (in Catalonia or in Murcia, if locals asked for it). However, I hate any ETA activist as much as the worst of Franquist torturers.