Its not really fair to say Iraq was a terrorist country just because it has al-Qaeda(numbers unknown) operatives within its country. There are certainly al-Qaeda members within America, but that doesn't mean America is a terrorist nation just because we have their operatives within the country.
As to whether there was a connection between Iraq's government and al-Qaeda, Colin Powell has said on numerous occasions, most recently in an interview with Barbara Walters that Iraq and al-Qaeda had no connection.
Also, the Carnegie Endowment for International Peace stated ""The most intensive searching over the last two years has produced no solid evidence of a co-operative relationship between Saddam Hussein's government and al-Qaeda."
As well as the 9/11 commission: ""We have no credible evidence that Iraq and al-Qaeda co-operated on attacks against the United States."
And the Senate Report of Prewar Intelligence in Iraq: "No information has emerged thus far to suggest that Saddam did try to employ al-Qaida in conducting terrorist attacks".
A great site that outlines the debate is
http://en.wikipedia.org/wiki/Saddam_Hussein_and_al-Qaeda
On a different note, its good to be back.