I usually place my Squid proxy servers as the network gateway/router. It usually has 2 network cards, but if you are sharing a T1, then it should be able to handle the incoming/outgoing data with 1 network card. My experience with Squid is that it takes about a month to fill up a ~10 Gig cache, depending on traffic, type of requests etc. Once the cache is full, I usually get about ~45% hit rate on the cache.
I would guess that after 1 day of running the Squid server, you are experiencing a very low cache hit rate, which is about the same as not having Squid there at all. You can use a free program called "Calamaris" (http://cord.de/tools/squid/calamaris/) to analyze your Squid logs, and tell you how much traffic you have, and what the cache hit rate was for the period of time in the logs.
You may have to wait longer until more items are cached. However, if you browse one graphic intensive site on one machine, you should be able to go to another machine and have the same page load almost instantly. If not, then something is wrong with your squid server.
Let us know how things go.