Sesquiterpene synthase converting farnesyl diphosphate to nerolidol. Has also a monoterpene synthase activity, converting geranyl diphosphate into linalool as the major product. Has no diterpene synthase activity. (2E,6E)-farnesyl diphosphate + H2O = (3S,6E)-nerolidol + diphosphate (2E)-geranyl diphosphate + H2O = (S)-linalool + diphosphate Binds 3 Mg(2+) or Mn(2+) ions per subunit. Secondary metabolite biosynthesis; terpenoid biosynthesis. Up-regulated by alamethicin treatment. The Asp-Asp-Xaa-Xaa-Asp/Glu (DDXXD/E) motif is important for the catalytic activity, presumably through binding to Mg(2+). Selaginella moellendorffii contains two distinct types of functional terpene synthases (TPS) genes, the typical seed plants TPS genes (SmTPSs) and a microbial type TPS genes (SmMTPSLs). Belongs to the terpene synthase family.