The following articles will give you a good idea how to set up a Squid Proxy Server.
Squid is a powerful Proxy Server that allows you to monitor and control users access to the Internet.
The following articles are based on Centos 5, but since Centos is pretty generic you should have no problems implementing Squid on other distributions.
Installing and setting up Squid with basic settings to get it working ....
requiring users to use a username and password to access the Internet gives you more control over who uses the Internet.
Using Squid in conjunction with Sarg to generate meaningful reports. Set up reporting with “sarg” as follows ....
How to Limit the amount of bandwidth a user can use when accessing the Internet. Use Squid in conjunction with Squish as follows .....
How to control access to undesirable websites using Squidguard. Squidguard will allow you to block websites based on lists and user groups.
How to install a front end manager for squidguard using squidguardmgr