South African police have arrested four men allegedly trying to sell radioactive Cesium-137 that could be used in a "dirty bomb." Cesium-137 is commonly used in medical gauges, and is very dangerous if removed from its sealed canisters. In 1987 in GoiĆ¢nia, Brazil, scrap metal scavengers unwittingly exposed such a source, and it resulted in 4 deaths and 249 other cases of radiation poisoning.
There's no danger of a nuclear bomb being made from it. However, it could be an ingredient in a "dirty bomb," which uses regular explosives to spread radioactive dust and soot. It wouldn't take much to create a very big problem.
For example, one study calculated the effects of a bomb with just 1/400th the power of the one used in Oklahoma City, combined with as much cesium as is in a single medical gauge. If set off near the U.S. Capitol, it would contaminate 40 city blocks.
That's nothing, however, compared to one that uses the Cobalt-60 found in food irradiation plants. Set off near 9/11's Ground Zero, it could contaminate almost 400 square miles
In most of those areas, the radiation would be small; it would just increase the chance of getting cancer by 0.05%. However, it would still exceed EPA limits, and decontamination would be required before the area was considered habitable. What's more, in the second scenario, half of Manhattan would have as much radiation as the permanently closed area around Chernobyl.
Panicked people who flee would endanger themselves more; they might breathe in the dust, and they'd be stuck in massive traffic jams anyway. That's a situation where it's best to "shelter in place," i.e., stay inside and wait for the dust to settle.
One bit of good news: there's no danger from the radioactive material in smoke detectors (Americium-241). The amount used is so small that it would take hundreds of thousands of them to make an effective dirty bomb. Many terrorists are incompetent, so if we're lucky, some idiot will try to use those instead of the really bad stuff.