Squidward and Sandy usually do not talk to each other. However, Squidward doesn't seem to mind Sandy and in some episodes they get along very well. This pairing is referrend by some fans as "Squindy".
The opinion on each other
Squidward thinks Sandy is the only normal person in his environment. As seen in episode "Squidtastic Voyage" Sandy actually cares about him, and is probably the most worried person about his problem (Squidward has swallowed his clarinet). If there is really anything between them, it would seem that it is Sandy who is more interested in Squidward than vice versa.
Episodes when they are talking with each other
- At Krusty Krab Halloween party Sandy greets Squidward, and he is asking her what she's supposed to be. She answers, but he says "I don't get it". Sandy walks away offended, but Squidward does not seem to care. It may imply that Sandy wanted Squidward to talk to her, but it's rather not a hint of attraction.
- Squidward jokes with others about Sandy pride, that she is a land creature, and these are better than sea ones. He does however seem to apologise, when Sandy rescues them from a seagull
Season 4 is a season where their frendship develops from very occasional talking to something more. Sandy and Squidward both seem to care more about each other
- Sandy seems to care most about Squidward in this episode, also she's a bit hitting on him (although, these are maybe just a friendly gestures), they are laughing with each other and Sandy tries to gently calm him down
- In this episode, Squidward begs Sandy to separate SpongeBob and himself.
- Sandy tries her best to teach Squidward Karate, however she is dissappointed when she discovers him beating someone in a revenge.