Ok, take a deep breath. None of your problems listed here is that tough. These are all common beginners' questions. Now, relax your hands. Sit there with nothing in them and relax them. Let them feel a little floppy. Nice, hm?
Pick up your knitting and tighten your hands. Now, relax them slowly. Relax them to the point where your knitting falls out of your hands. No big deal, pick it back up. Now relax your hands about halfway. Aaahhhhhh. They will still feel relaxed but you won't drop your knitting. As you start knitting, keep reminding yourself to hold your hands about halfway relaxed.
The best stitch for your first few projects is garter stitch, where every row is knit. Blankets are great in garter stitch anyway. I have been knitting over 20 years, have done tons of (i.e., more than 25) full sweaters, and like to knit freehand scenes and pictures into my work. Yep, I'm a knitter. Right now, honest, I have a blanket on the needles for my niece's wedding in September. I am using garter stitch. Truth!
Garter stitch does not have to be tight. Relax your hands and don't pull your yarn too tight while you're working it. Your stitches should be tight enough not to fall off the needles and loose enough to slide easily when you push them to one side or the other.
Use garter stitch for all your squares. Use different colors that go well together. When all your squares are done, alternate them when you sew them together to make the blanket. Arrange them so you have some with the lines running north-south, and others with the lines running east-west. It will look like a pattern you planned.