Was there a specific reason that you wanted to compile squid proxy from scratch? If not it would be much easier to install it from the synaptic package manager (System->Administration->Synaptic Package manager .... search for squid). Then all you have to do is configure Squid to your liking. All you have to do is edit the squid.conf file. This file is usually located at: /usr/local/squid/etc/squid.conf
I'm not sure exactly what you're going for with your proxy, so I can't provide much help in configuring, but here are is a FAQ on squidhttp://wiki.squid-cache.org/SquidFaq/Confi...compiling_it.3F
If you do want to compile squid you could do it as follows.
unpack the source file with this command:
tar -xvzf squid-*-src.tar.gz
cd into the new directory
run the following in order: