Of course you can negotiate, we see this happening all the time. Terrorist organisations are also often taken off terrorist lists often as well which helps to make the talks more acceptable politically.
Terrorism is a complex issue and it is often portrayed as being very black and white, especially in the media. Though I do not condone terrorism I understand why it is used. When one side is too militarily weak and it cannot gain its political objectives through negotiations and traditional use of force they often resort to terrorism as a means of last resort.
A case in point are the Palestinians. I'm sure they would rather be using modern sophisticated weapons to fight Israel but as they are lacking in such weapons and stand no chance militarily they resort to terrorism in order to achieve political objectives. Having said that I don't believe it is a strategy that works but it's a reason why I see it being used.
It also helps when they renounce the use of violence and are willing to negotiate. A good example is the IRA in northern Ireland and more recently ETA in Spain.
