Let's say that you are attacking a goblin foot unit. Your roll yields (1) retreat flag (the rest are misses).....so the frightened goblins should retreat 2 hexes. But, in this scenario the goblins are blocked from retreating via. terrain and another other unit. A typical foot unit would lose (1) member per hex it cannot retreat...since the goblins should retreat (2) hesxes but cannot do they lose (2) members? THEN......since the goblins are also checked for panic loss, do you get to roll (2) die for the (2) hexes it was supposed to retreat or, because they are blocked from running, do they ignore the panic check?

You do a panic loss check for each hex they retreat. In this case since they could not retreat there is no panic loss check because the unit did not retreat any hexes (and had to suffer the penalty for not retreating).

Thanks...that's what I suspected was the correct ruling but, since this scenario will play out tomorrow (when it's my turn) I wanted to know for sure.