It looks like you have a logic error involving your found variable: you probably want to set it to 0 before the inner loop, then set it to 1 if s1[ i ] == s2[ j ].
The break will break from the inner loop, not the outer loop, so there is no problem there.
By the way, we would normally save the result of each strlen call into a variable since those values do not change here. In fact, you can make your squeeze function more const correct by making s1 and s2 be pointers to const char.
EDIT:
Oh wait, you do reset found to 0 at the end of the outer for loop body, so that is fine. (But I would still prefer setting it to 0 at the start of the loop.)
Originally Posted by Bjarne Stroustrup (2000-10-14)
