I am curious how most people use the Friend/Foe Indicator. When you see the red "foe" indicator appear, what do most of you do?

Do you stop walking, make sure you have the most powerful weapon in your inventory equiped, and then slowly walk towards where the enemy is at? Do you immediately go into "sneak" mode, and creep up to or around the enemy? Or do you ignore the indicator and keep doing what you are doing until you get attacked?

I normally do the ignore option, since that seems more realistic. I mean, you shouldn't be able to tell there is an enemy behind a hill or building. But I am finding myself doing the sneak method more often as the game gets harder.

What do others do?

I turned that indicator off (using mod) and also turned off sneak/caution/danger message (using GECK) so now I must find enemy with my own eyes. Seems more realistic and adds lots of fun and atmosphere in to the game. You can not just run around and count on your compass, you have to be careful walking around corner and scout ahead when going somewhere. You can be easily ambushed if you do not pay attention.

And I had to turn music off as game changes music in danger mode. Was not too big loss at the end, if I want some music I can always turn on radio

Try it out, you will not want to revert back to compass anymore.

The indicator can be seen as a compilation of all you senses, kind of like your gut instinct. Your might hear something, or notice some bootmarks on the ground, or smell something, whatever, any sort of sensory input not available in a videogame. So in that sense I think it is often quite realistic. That...and the sensor robot following you around.

As for my reactions, a lot of the time I have a pretty good guess what it is from the context. A lot of friendlies mixed with reds and no gunfire? Looks like cattle. Red dots moving around quickly? Cazadors for sure. And just pick the appropriate response. Do I think those red dots are Fiends? Just roll right on up and bust a cap. Red dots in Deathclaw territory? Sneak time.