Welcome to LQ.
I'm not sure what you've got & what you are trying to do w/ it, starting w/ your title. Isn't squid
the proxy, not Dansguardian? And what is this "transguardian" that you mention in your post?
Is the Ubuntu 8.10 box on which you "managed to install squid, transguardian and firestarter" a dedicated firewall/router/gateway, or a workstation that is doing double duty?
If you are asking Ubuntu 8.10 to do double duty, I would find an old "doorstop" & set it up as a dedicated firewall/router/gateway. I would not use any desktop or even server distro for this function, I would install a specialty distro on a dedicated box, like:
(I have worked w/ the 1st 2, extensively w/ SmoothWall Express)