Do squids only spawn in normal water over level 41, or it can also spawn in flowing water over level 41? Thank
Squids will spawn in any body of water between Y-level 46 and sea level, though (obviously) they will go higher or lower as water permits. While they can spawn in any size body of water they'll, obviously, have a much higher spawn rate in larger pools.
If you're farming them, recommend a 15x15 pool ranging from Y-46 (bottom) to Y-64 (top) in depth. Gives you a decent pool to work with and covers the entire spawn range.
According to the Minecraft Wiki:
Squids can spawn in 1 or more blocks of water, any light level, spawning block must be between level 46 (inclusive) and sea level, and they can spawn in any biome.
In Pocket Edition, squid spawn only in ocean biomes. They also have a chance to spawn as babies.