What is wrong with this squid farm ( not spawning )
Solution 1:
Squid do not spawn in dessert biomes. Although the wiki suggest building a squid farm in a desert biome, it also states that the rabbits are the only passive mob to spawn here (clearly a mistake on the page about squids).
I can only guess the suggestion to build in a dessert biome is to get across the idea that you want to build where there is little natural water.