In a heavy bottomed pan over medium heat, cook condensed milk until golden brown in colour, stirring constantly. The caramel will turn thicker as it cooks, but constant stirring will ensure an even colour.
Remove caramel from heat and whisk in cream and milk a little at a time, being careful for steam that comes off the hot caramel when cream is added. Add salt. Stir in vanilla extract and cool mix completely.
Prepare ice cream in an ice cream maker, following the manufacturer’s instructions.
Spoon freshly made ice cream into a plastic wrap-lined loaf pan or 8-inch cake pan. Freeze until firm. Remove ice cream from pan and coat with chopped hazelnuts. Wrap and re-freeze until ready to serve.
Place all ingredients except vanilla in a pot and simmer over medium heat for 5 minutes, stirring occasionally until thickened. Remove from heat and stir in vanilla. Chill until ready to serve.
Slice ice cream terrine with a hot, dry knife and place on plate. Drizzle butterscotch sauce around terrine, or pool over one edge of terrine slice.