i usually hold down the square button and i thought that's what you had to do. up on dpad then hold square over the enemies. perhaps i need only press the square when the crosshairs are right over the enemy, i'll check it out tonight. i think spotting is very cool, i spotted endlessly in bfbc2, and not used enough in c2. it can be devastating, especially if you are able to light up their whole team.
It's really useful, more people should do it, if a tagged enemy goes into cloak he's still lit up in red + you get assists + points if the enemy dies.