There's a ton of so called experts out there that talk about whether or not to do full squats. Full squats means that you go all the way down below parallel to the ground and half squats meaning stopping above parallel to the ground. I personally have done squats all the way down below parallel and have worked up to some pretty heavy weight. It does put torque on the knee which could be a really good thing to strengthen it or it could be a really bad thing if you have an injury or don't use perfect form. You'll want to work in the range of motion you can without compensation. If you don't have the flexibility to go all the way down, that's fine, just do what you can and build up to a greater range of motion.
Form and Technique:
Here's what you do, first wrap a towel around the bar to give a little cushion. Do not use the round pads that you find lying around the gym. 1) they're too squishy which leads to the barbell moving around and 2) those pads have serious germs!! When you put the bar on your back, flex your traps and pinch your shoulder blades together in order to create a ledge for the bar to rest on. You don't want the bar on the back of your neck. Then grab the bar tightly with your hands just outside of shoulder width. Lift the bar off the rack.
Now your stance should be shoulder width or slightly wider. Not crazy sumo style wide like I see some of you doing! The feet should be pointing straight ahead or toes slightly out. Your feet too should not be too far apart or toes pointed too far out because your joints don't line up and it puts a ton of stress on your ankles, knees, and hips.
With the bar held tightly against your traps, take a deep breath and hold it, slowly descend down. How far you go is up to you, if your flexible enough and you can go down below parallel with out pain then do it. If you can't, work in the range of motion that's pain free and you can build up your flexibility over time. Smoothly slow the weight down when you get to the bottom position and make the transition controlled and keep the tension high on your muscles. The smoother and slower you make the transitions the more muscles you'll get working. No bouncing in the bottom position! After you transition to the positive, power up controlling the weight and keeping everything flexed hard.
Try and keep the weight smoothly moving at all times. You should try and do as many as you can without pausing at the top. After about 10-15 reps you'll be breathing pretty hard and have to take a pause at the top, that's fine.