If a sleeping Pokemon that's doesn't have levitate or is a flying type switches in while misty terrain is active does it cure it?!?
Nope, Ferrothorn was still paralyzed.
Hope this helps! :)
Misty Terrain only prevents new status conditions from being inflicted on affected Pokémon.
So if a Ferrothorn used Thunder Wave on a Crawdaunt, for instance, Misty Terrain would prevent the Crawduant from being Paralysed.