Squid's Room was a room for IBallisticSquid built in Episode 159.
In Stampy's Lovely World, IBallisticSquid, one of his Minecraft Helpers, started building a little house for himself in Episode 102, because, AmyLee33 and Rosie833 kicked him out of his old room across from Stampy's room. He finished it in Episode 159. Unfortunately, his house was destroyed by the evil Hit the Target and Veeva Dash in Episode 455. His room was beyond repair and never was rebuilt, and the remains were removed, and the entrance was sealed.
As you walked into the big massive Dog House where Stampy's dogs are kept, you should have saw a door on to your left. If you walked in it, you would have seen a little blue entrance. As you continue to walk around this room, you would have seen a kitchen that lead to a little balcony/fishing area outside. Then below the kitchen was a Living Room with a flat screen television, bluish couch, and wardrobes. Also, there were 9 item frames of Ink sacs around the little apartment. And finally, you came into a small sized Bedroom with a blue shower Squid claims he actually slept in! And finally, sometimes you should have seen a slippery fellow hanging out there! It was a pretty good establishment for the slippery kind.