What the heck is a xarsquid? I know its a tank sized squid that shoots at you but:
What are its weaknesses?
What are its strengths?
Who do they work with? (on terror missions and such)

It's a nautilus with a gun. Since it's a 2x2 unit explosives do 4x damage. I think it is either Lobsterman or Gillman that they go with. But you usually only see them underwater.. I've had them on Gillmen undersea missions and Lobsterman ship terror sites.

Its gillies so far, just cleared that uso with no losses
got a score of somewhere around 367 on that mission alone

I've only seen the xarquid once in the water. Two times in cruise ships (stuck in the exact same room each time), and once in T'Leth.

Four times in total.

I found 2, and both times they didnt shoot at my men because half of it was hidden behind a wall
Lucky Guys

I've seen them everywhere save for base defense, and port terror sites.......and I think colony missions too. They tag along with Tasoths sometimes, on those weird terror sites where they got tasoths, aquatoids, bio-drones and either a tricene or a Xarquid or both.

I got slaughtered by a pack of them below deck on a cruise ship once. O.o
They tend to spawn at the front of the ship on the 4th level. I had a Tricene and 3 Xarquids in one room..... 8 men died killing them. >.<
THANK YOU UNDERWATER ONLY SUPER WEAPONS!!!!!!!

yes, the main thing xarquids are good at it spraying reaction fire all over the place

I don't think Xarquids are supposed to appear out of the water, I think it's a glitch. The only time I have ever seen them actually "work" (meaning they moved and shot at my men with relative skill) is underwater on Artifact Sites, Large USOs and Alien Base Attacks. I have seen them on Cruise Ships and Port Attacks, but they are always glitched out and that leads me to believe they aren't supposed to be there.

They just reaction fired on me.

That fits, given that underwater only weapons, I believe, can be reaction fired on the surface.

Each group of non terrorist aliens have 2 types of alines that go with them into combat. one for land and the other for sea. So if you shoot down the terror ship befor it lands you get the underater units. Howeer if the ship is flaged for multirace then you get a random type nomater where they land.

-Blade FireLight

I've yet only encountered seaborne Xarquids, usually in bases or at those Synonium (sp?) sites. They seem to associate w/ Tasoths. An Alien grenade is just enough for one of 'em and 2 hits form a Sonic Blasta rifle are usually enough to make them go to Alien heaven or whatever it is where good lil' Aliens go when the beef it!