Answer
The grouping should be: the $y$ term versus the other $3$ terms.
Work Step by Step
We have to factor the polynomial:
$$p(x,y)=x^2-y^2+8x-16.$$
We cannot group the expression in two groups of two terms because the expression contains $2$ variables and one of them is present in only one of the $4$ terms.
Therefore we will group the other $3$ terms in one group and see if we obtain a difference of squares:
$$\begin{align*}
(x^2+8x-16)-y^2.
\end{align*}$$
The given expression cannot be further factored as we cannot write $x^2+8x-16$ as a perfect square.
In case the polynomial was $p(x,y)=x^2-y^2+8x+16$, the factoring would have been:
$$\begin{align*}
(x^2+8x+16)-y^2&=(x+4)^2-y^2\\
&=(x+4+y)(x+4-y).
\end{align*}$$
