Information that a Western housing compound here was being surveyed by terrorists appeared to be based on a videotape of the residential complex found during a raid of a militant hide-out, the manager of the housing facility said Thursday.

Richard May said the management of the Seder Village (search) was notified more than a week ago by the Saudi National Guard (search) that the tape had been discovered during a raid on terrorist suspects.

"We don't know exactly what was on this tape. We never saw it, but we were informed by the Saudis that there were some external shots taken of the compound from various points," May said.

On Thursday, armored personnel carriers guarded the rain-soaked Seder Village compound, where cars were being screened by guards wearing yellow raincoats.

Elsewhere in the capital, security also was tight. Armored personnel carriers were seen parked outside other western housing complexes and soldiers armed with semiautomatic rifles stood behind sandbag checkpoints at key intersections throughout the capital.

Soon after the Saudis discovered the alleged surveillance tape during a Nov. 25 raid, they met the compound's managers, informed them of their discovery and asked them to upgrade security, May said.

Saudi authorities could not be reached for comment Thursday, the first day of the weekend in the kingdom.

On Tuesday, the U.S. and British embassies named Seder Village as possibly the next terror target after the May 12 and Nov. 6 bombings of residential housing compounds. The embassies said Seder Village was under "active surveillance" of the terrorists, adding that their information was based on, "close consultations with the Saudi authorities."

May, a Briton, said the embassies' warnings created an "unnecessary panic" among the residents. Some feared an attack that night and moved into hotels, but many returned the next day after realizing the "immediate threat didn't exist," he said.

The 500 residents of the compound were immediately informed of the Saudi find and upgraded their security, May said. He said the residents are mainly Westerners. Americans are a minority.

Roadblocks were erected around the dun-colored walls of the compound, which has 270 spacious houses. The National Guard dispatched several units to the 25-year-old facility, which already was equipped with surveillance cameras. "Other appropriate measures" also were taken, May said.

On Wednesday, the Interior Ministry announced the Nov. 25 terror cell bust and said one man was arrested in the bombing of the Muhaya housing compound in Riyadh on Nov. 8, which killed 17 people and wounded more than 120. It was the first arrest in that attack.

American and Saudi officials have blamed the attack on Al Qaeda terrorist network of Usama bin Laden, a Saudi exile.

The Saudi Interior Ministry, in charge of the kingdom's police, issued a statement Wednesday saying the suspected Islamic militant was found hiding with a cache of weapons and "pamphlets inciting terrorist acts." It said the man was arrested a week ago but that his identity would not be revealed to protect the investigation.

The cache seized with the suspect included a SAM-7 surface-to-air missile (search) capable of downing a plane at low altitude; 20 high explosive hand grenades; 89 electrical detonators; blocks of explosives; six booby-trapped mobile phones; three computers; and 94,395 riyals ($25,000) in cash.

Saudis welcome the arrest and weapons cache seizure.

"Thank God, they (Saudi authorities) caught this man, otherwise God knows what would have happened," said Turki al-Washmy, 25.

"Our security forces are doing a good job and I pray that they catch each and every one of these terrorists as soon as possible," said al-Washmy.

The arrest comes with tensions high in the Saudi capital after attacks on foreign housing compounds in May, the November attack, and renewed American and British warnings this week of possible new attacks on housing compounds for foreigners.

An American businessman who has lived in Saudi Arabia for 15 years admitted that he does not feel as safe as he once did.

"It's a big surprise to everybody that something like that (the attacks) could happen in Saudi Arabia," said William M. Barilika of Stamford, Conn. He said people at home had been calling asking him to return to the United States.

The U.S. government issued a travel warning for Americans to "defer non-essential travel to Saudi Arabia. Americans are reminded of the potential for further terrorist actions against U.S. citizens abroad, including in the Persian Gulf region."