The west would have seen it as the welcome addition of a great power onto their side, but not in any way as a critical mistake by the Germans or a turning point in the war. The Nazis were expected to win, but at a great cost in time and manpower.

 

Here is some background that a western contemporary would have been very aware of: Russia had just gone through forty years of military humiliation. The Russo-Japanese war 1904-1905 was a stunning defeat for Russia both on land and at sea and established Japan as a major power in Asia. The first world war fared no better for Russia. In the Guns of August by Barbara Tuchman describes Russia as being perceived by the west as a huge juggernaut, slow to build power and mobilize, but ultimately able to bring the largest army down upon Germany. Russia had huge problems with communication and logistics at the start of the war, and towards the end, the will of the army to fight had almost completely disintegrated. With the Russian Revolution and the Bolshevik arrival to power, the treaty of Brest-Litovsk was signed. It was humiliating and one sided; it ceded over one million miles of territory and forced Russia to break its alliances.

 

There was no postwar boom for Russia. It was in a civil war and by 1921 agricultural production was almost half that of 1913, industrial production was faring just as poorly. The intervention in the civil war by western powers resulted in lasting paranoia and suspicion towards capitalist countries. Indeed offers of lend lease in the second world war were met with surprise and suspicion (while not in the scope of the question, Russia's Life-Saver: Lend-Lease Aid to the U.S.S.R. in World War II by Albert Weeks is a good look at the aid to Russia by the United State).

 

The great purge of 1937 was massively damaging to the officer corp of the army. While the major trials were well publicised, the west would have not known the extent of the purges, and damage to the army, until well after the second world war.

 

While a limited success, the 1939 invasion of Finland was a well publicised humiliation. With a population of 170 Million and a reserve of 16 million, the Soviet Union intended to quickly overrun Finland and establish a Soviet puppet government. The Finnish resistance was well publicised as were the failures of the invading Soviets. The USSR took a significant amount of land but the war was seen as a Pyrrhic victory, calling into question the effectiveness of the Russian armed forces.

 

All of these events would have been well known to the west. Russia was (and had been for a very long time been) seen as a huge blundering giant. The view of the “Russian Steamroller” was of a bottomless supply of men that were spent poorly. It was rapidly being modernized with the largest machine-building industry in Europe (The USSR During the Interwar Period: Political Diplomatic Aspects by Cristian Sandache is a good short read on this topic). Keep in mind that the USSR was a secretive state, even attempting to hide major famines. The quantity, quality, and mechanization of the Russian army in 1940 was not well known to the outside world.

 

The state of the world on June 22, 1941 was that Germany deployed the most powerful military forces in the world. They had conquered Denmark and Norway, then the Netherlands, Belgium and France in 1940 and, in the same year, had driven the British from continental Europe. Only the The Royal Air Force and Navy had saved the United Kingdom from invasion (thanks /u/tim_mcdaniel and /u/stefan_zhirkov for a correcting me!). Two months before the invasion of Russia, German armies - preceded by mass bombing - had overrun Yugoslavia and Greece.

 

Here is the front page of the New York Times on that day. Note that there is mention of the massive size of the red army and immediate comparisons to Napoleon's folly. Hitler’s army was described as invincible and overwhelming.

 

Keep in mind that the United States was a neutral power and France had already fallen. The intelligence agencies of the west knew long before of the Nazi plans to invade the USSR and attempted to warn the Soviets. The view at the time, and through much of the war, was that the Soviets were an ally of convenience. This was much more true for the British than the Americans, who painted the Russians in a much more sympathetic light. With the delay of the invasion of France to 1944, Stalin had accused the western powers of using Russia to bleed the Nazi armies. This was probably exactly the view of the British in 1941, that and relief. This huge mass of men was now the focus of the German army, which was previously dedicated to securing a landing on the British Islands.

 

The US War Department warned FDR that the Soviets would not last more than six weeks, but FDR decided to deliver lend lease anyway. This indicated that he may not have trusted those estimates, as the lend lease only started to arrive after October.

 

In his speech on the day of the invasion, Winston Churchill expresses disdain for the communist government, but support for its people. He indicates that Russia is in dire danger. The British government expected the Russians to fall, the invasion was seen as logically sound. The rearmament of the USSR was well known and it was perceived that in a few years time (as actually happened) the red army would have been a match for the Nazi army. The cost of successfully invading and administering a conquered Russia would have been enormous and taken a tremendous amount of time, giving the besieged British breathing room and allow for the entry of the United States into the war. Given the poor history of the Russian army most western governments expected the USSR to be overrun, but even in this worst case scenario it was seen as a good thing.

I would like to dispute the premise of this question. Certainly Hitler spoke about the war being a, pardon the expression, cake walk. But did the German state-at-large think so? Difficult to say. It seems to me that there was actually a wide amount of skepticism within the German military that the USSR could be defeated, especially among thinkers who considered the ramification of a not-total strategic defeat with the initial attack. Certainly there were some members of the Reich Defense Ministry and OKW who considered the naked disparity of populations and economies in play.

Gerog Thomas, chief of the important Defence Economy and Armament Office, even went as far as to write a report urging that the operation be delayed for, well, all the reasons that made it fail. Thomas definitely had information that other administration members did not have access too, but I think it is hard to believe that most of the OKW General Staff believed a war with the Soviet Union would be anything but a close-run thing, even after seeing Finland.

Yes.

In World War I, Russia under preformed. Russia would attack the Austria-Hungary army on the Eastern front & Germany would arrive to push Russia back. Because of this, Germany considered this a victory because of how large Russia was and Germany was also fighting on the Western front at the same time.

For WWII The USSR really struggled against Finland during the Winter War. The USSR had double the amount of man power. Finland had around 30 tanks while the USSR brought several thousand.. Finland had somewhere between 300 planes while Russia had over 2,000. Germany also made sure that Finland was isolated from support or aid.

In theory, the USSR should have walked all over Finland, but they didn't. The Finland army made Russia fight for every inch, despite their disadvantages. After four months, they signed a peace treaty.

Meanwhile, the Nazi regime was steam rolling anything put in it's place. from 1939 to 1940, they defeated Poland, The Nederlands, Belgium, Denmark Norway, Gutenberg & France. They where also attacking The United Kingdom as well.

With the knowledge that Hitler knew, he figured his army would be able to steam role the far statistically weaker USSR. Stalin, on the other hand, thought Hitler was a "realist", believing he would be "a stupid man" if he fought a war on two fronts. Stalin was so confident in this that he didn't even bother to protect his front, even when German troops where assembling. Due to this, Germany was able to storm through without any resistance. Stalin didn't believe it at first & waited over a week before acting,

Germany was also able to destroy planes, tanks & other equipment. This crippled Russia from mounting a successful counter attack.

Germany, however, had to wait for Winter because the rain made it impossible to move trucks and tanks. The roads/paths became incredibly muddy, making any thing on wheels sink. The will of the Russian people also stalled the Nazi advance, example being Leningrad not falling despite it's horrifying siege.

If it wasn't for this, I believe that The USSR would have fallen to the Nazis. This brought Russia enough time to gather it's forces and defend Moscow & Stalingrad. Most importantly, it brought him much needed time to make alliances with The UK & America.