Im sure Im missing something here, but when a friend tried to invite me using the friends system while on the menu, the game gave me a message for an invite to join him in the "menu". Likewise when I did the same to him.

Clicking anywhere near the squad graphic doesn't seem to accomplish anything and the various menus don't seem to have anything to indicate what to do.

Sending an invitation to someone via the friends list means invitation to your squad, and your squad members are forced to join you regardless to whether you're in game or in menu. As such, accepting an invitation means joining your squad and ending up in the menu since you are there.

But since the invited person now is in your squad (his nick appears in your squad list), if you join a server he does too, automatically.

Thats what we did. Except when we tried we got a connection error message. Can't remember it exactly at the moment.