The T-888 is hunting down and exterminating any and all Martin Bedells in California, because Bedell in the future is an engineer who's a major help to future John Connor. Nice job on Skynet's part, because if the "look up the name in the phone book and kill 'em all" method had worked in the first place, the Terminator franchise would have lasted all of one movie. And it would have been a short movie at that. So Unky Derek and John go after one of the two remaining Bedells (likely the right one, based on the cryptic message left behind on the wall a couple of episodes ago) at a military school, with Derek flashing back to the future and remembering him and his brother with Martin, disobeying John's orders to save some prisoners from the Terminators ("tin cans" in future parlance).
So Derek sweet-talks the head of the military school into enrolling John (as John Baum) and the school director is so impressed with the way Derek surrenders as LITTLE INFORMATION AS POSSIBLE about himself that he signs Derek up as a teacher-advisor right there on the spot, even though Derek himself protests.
John goes to work impressing as a killing-machine-in-training, which garners the attention of Bedell, and Derek winds up making overly excited cadets regret they ever decided they want to get into the service. And also possibly makes them wet their pants.
As for Sarah and Cameron, they've found the other Martin Bedell, but he's just a kid, and kind of an asshole when it comes to online videogaming. They save him mere split-seconds before he's about to be cut down by gunfire from the T-888, but from the obnoxious way this kid plays videogames, you're thinking it wouldn't be so bad if Cameron and Sarah hung back a little. Instead, they kidnap him to some other house. He watches his mom plead with the kidnappers on television, but he's more concerned about getting his book report done, and they find him The Wizard of Oz to write about. You know, "Baum" and all that.