I am new to playing Tide of Iron and still have a few questions about playing. When making a suppressive mortar attack does terrian cover apply since it is an area attack?

Yes, terrain does still apply.

If I also have a mortar unit with two regular infantry do the two regular infantry become fatigued when I perform an area attack with the mortar crew?

Yes, they do. See rulebook page 10, "When a player activates a squad, he activates the entire squad, not a specific individual figure within..."

That means you may for some reason use just a part of the squad - like mortars - but the whole squad becomes fatigued afterwards.