The squeeling I think has to do with a small build up of ink on the carriage.
What I do is I open up the printer top so you can see the carriage as if you were putting in a printhead and then you unplug the power to the printer when teh carriage is in the unlocked position. Now you can freely move the carriage back and forth. If you notice there is a clearish long strip going from one side of the printer to the other that is placed flat ontop of the entire metal inside casing of the printer. Clean that entire strip with a cloth or something. Now take a piece of paper and fold it a few times so that it ends up looking like a ruler you can say. Put the paper flat on that clear strip and then take the carriage and move it over the paper. Basically your cleaning the underpart of the carriage that touches that clear strip that is attached to the metal body of the printer. Move it back and forth and you will see ink being put onto the paper thus cleaning it.
Just close the case up, plug in your printer and the squeaking should be solved till next time. As for that light problem, don't know what those lights mean. If there is a problem with teh printhead or ink though it will always tell you on the digital read out, or at least should.
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