Master of Rock and Stone: Terrax and friendly characters can use IM ■.

Major Earthquake: Give Terrax a power action and make a ranged combat attack targeting all characters occupying or adjacent to a square within his range and line of fire. A hit character occupying that square is dealt 4 damage, and each hit character adjacent to that square is dealt 3 damage.

Stone Gives Me Strength: Modify Terrax's damage value by the number of squares of blocking terrain adjacent to him.

See Improved Movement for more information.

When Terrax uses Major Earthquake, does he need to be able to draw line of fire to the characters? Will Stealth help keep a character safe from this attack?
Line of fire is drawn to the chosen square, not to the character(s). Stealth will have no effect on Major Earthquake.

I know blocking terrain, if properly arranged, can prevent adjacency. Will that matter for Stone Gives Me Strength? Can blocking terrain block Terrax's adjacency to other blocking terrain?
Yes. Blocking terrain can indeed get in Terrax's way for this power. For example:

. B B
. T B
. . .

The two squares of blocking terrain represented by black Bs create continuous blocking terrain, preventing Terrax (T) from being adjacent to the square of blocking terrain represented in red.

In this kind of configuration, Terrax's damage value is only modified by +2, and not +3.