It is a particularly horrible scenario. The putative "Dirty Bomb". I have used the analogy before that a "couple of grams of plutonium and a hand grenade" - or some device close to this, and an entire city the size of London (which is not so far from where I am typing) would have to be evacuated. Although small nuclear devices - the "bomb in a suitcase" - do exist (at least I am told they do?), it is not necessary to get hold of the nominal 8 kilograms of plutonium ( or as little as 3 or 4 kilos with new technology) to achieve a wholesale nuclear detonation in order to wreak widescale terror on millions of people, and to set a smouldering signal for all the world to see. A dirty bomb - which releases radioactive contamination not a major blast - is more like a biological weapon. True, the latter may kill in huge numbers (e.g. anthrax), but it is its influence on the human psyche that is most pernicious. We fear radiation in the same way as we do "germs" - they are impervious to our immediate senses: we cannot see, smell or hear them, and we shrink from touching or tasting them, going to all lengths to avoid any such contact. Hence the generalised phobia about nuclear power that pertains.
It would be very difficult to get hold of several kilos of plutonium (to make a uranium bomb would require probably 50 kilos of enriched uranium), but getting hold of smaller (gram) quantities is a far simpler task. But to make a dirty bomb, pretty well any kind of radioactive material would do. For example, in the former U.S.S.R. cobalt-60 (artificially produced by irradiating "natural" cobalt-59 with neutrons in a nuclear reactor) was used on the large scale in "seed irradiators", to mutate the plant's DNA such that the seed so treated would yield a crop with some desired new features. There are thousands of these devices "around", and hence getting hold of the (dirty) bomb material would not be difficult. To make a detonator for it, there are all kinds of possibilities, with recipes in abundance on the internet to supply terrorism of all kinds.
According to official figures from the International Atomic Energy Agency (IAEA), seizures of radioactive material which could be fabricated into a dirty bomb have doubled in the past four years, with smugglers being caught 300 times trying to bring radioactive material into the U.K. since 2002. Clearly the game is being "upped". Indeed, it is known that al-Quaeda is redoubling its efforts to obtain a radioactive device of some kind, and I guess the market forces may be at work to supply the product that is demanded. It is believed that the nuclear traffickers are targeting hospital equipment, such as is used for cancer radiation therapy, and laboratory supplies. Indeed, I have worked in industry and in several universities, and there was always radioactive material around somewhere. In Europe and the U.S. there are stringently enforced regulations to control the use of radioactive material, but in the former Eastern-bloc countries this is I believe less the case. Even in the U.K., there are tales of "missing plutonium" at Sellafield, and I'm sure that radioactive substances in this country are not quite as hermetically contained as we would like, or be liked to believe.
In one university I worked at, a "box" arrived one day. It contained radioactive iodine (iodine-130) for use in tracer studies. The recipient was away for a few weeks abroad, and so it simply sat on a bench in the lab. Out of curiosity, I pointed a Geiger Counter at it - the meter screamed and went offscale! I put the box in the fume-hood, and went into the lab next door - amazingly, the Geiger counter still went nearly full scale, and that was even with the radiation being attenuated by passing through the thickness of a solid brick wall or so! Hence penetration of the human body was well within its scope. In the same university there was a cobalt-60 source, and also americium sources for neutron activation analysis. Behind a pile of lead bricks just inside the door, were all kinds of radioactive materials, thorium, uranium, and others, which anybody could have grabbed a bottle of. The sink in the room was also highly radioactive, presumably due to radioactive materials being thrown down it in some half-arsed attempt to dispose of them!
There are all kinds of horror stories about radioactive material, most of which were simply down to stupid accidents, in a combination of ignorance and negligence. Chernobyl is the best example of widespread contamination, extending over much of Western Europe, but by inadvertent means. Now we may expect something aimed quite deliberately our way, and with more serious fallout.