I have an internet connection. It works fine on linux. I need to share the nternet connection to two other pcs ( Win XP ) which are connected to my pc. Can you please tell me all the steps to configure squid?

My IP: 192.168.0.204
Other Pcs: 192.168.0.215, 192.168.0.206

I tried the following, it did not work:

I made few chages to /etc/squid.conf file:

http_port = 808

acl one 192.168.0.215
acl two 192.168.0.205

http_access allow one
http_access allow two

And I restarted the squid service:
service squid restart

But I checked on the other pcs, it did not work.

What are the steps I need to do?

You do not need squid to do this. I assume your Linux box is the one that is connected both to the Internet and to your local net (the 192.168.0.x net). You can use a facility called iptables to do this, and at the same time, you can set up firewall rules to protect the whole net (somewhat) from intrusions. I have written one of a large number of tutorials on this topic, available here

Once you get that firewall set up to filter and to do Network Address Translation, then all you need to do to your XP machines is to make sure that they are configured so that the Default Gateway address is your Linux box 192.168.0.x address.

HTH

This is unconventional (unless a typo): maybe you mean 80? Or 8080?

However that shouldn't stop it working, provided everybody agrees about the port that will be used. Otherwise, it will fail.