If Terry Silver does come back, Cobra Kai season 6 will have a major problem to overcome in regards to his role in the series. Silver was finally defeated in the season 5 finale, but it's important to note that the events of the episode don't rule out additional appearances from the character. His arrest on its own isn't enough to stop Silver from being a threat when Cobra Kai returns.
In spite of the scene that showed Silver being shoved into a police car, nothing that occurred in the Cobra Kai season 5 finale confirms he's going to prison. He's been arrested, but a conviction is still needed for Silver to be removed from the board for good. Given his financial resources, it's not hard to imagine Silver's lawyers finding a way for him to avoid prison time. If that happens, he could resume his feud with Daniel and Johnny in Cobra Kai season 6, albeit without the support of his students, who became disillusioned him when they discovered the lengths he went to in order to win the All Valley Karate Tournament.
Terry Silver Has Already Been Defeated Twice
If Cobra Kai does bring Silver back, having him around will come with some significant complications. In addition to losing his Cobra Kai students, the character lost his status as the ultimate villain of The Karate Kid franchise, and it's not something that can be easily won back. Before season 5, there was good reason to believe that Silver was the main characters' greatest enemy. His easy victory over Johnny and what had been seen of his fighting skills gave the impression that he was the show's best fighter. But the season 5 finale undermined that in a huge way by giving the character not one, but two major defeats by the end of the episode.
In proving that both Chozen and Daniel can beat Silver, Cobra Kai has severely weakened his reputation in The Karate Kid universe. If Cobra Kai intends to keep Terry Silver around as a villain, it'll struggle to depict him as the menacing and seemingly unbeatable force that he was before. Having witnessed his vulnerable side in the finale, both the characters and the viewers know that Silver can be beaten.
Terry Silver Can't Be The Villain Again
Due to the issues that come with a possible return to the series, it's unlikely that Terry Silver will be the main villain in season 6 even if he does come back. He could maintain an antagonistic presence in the Valley, but his days of being Johnny and Daniel's biggest problem appear to be over. Instead, exploring the possibility of redemption, Silver causing headaches for the characters in other ways, and pitting him against Kreese may be better options for his new arc. The latter storyline makes the most sense, especially when taking into consideration the fact that Kreese has unfinished business with his former partner. Cobra Kai properly concluded his rivalry with Johnny and Daniel, but has yet to offer closure to his conflict with Kreese.