Sounds like you're making excuses for the terrier to me.
When I discipline one of my dogs in front of the other two they shit themselves and run into there beds, they don't try and help the dog thats being disciplined by biting me because they know who is in charge, ME!!!!!!!!
You've got to be firmer with them than you are being, by the sounds of it!
I'd have the Terrier PTS, you're trying to convince yourself he was just confused, when the fact of the matter is, he bit you for no good reason.