If it ever starts making a squeaking sound, or it does now, then it NEEDs to be done. I'm not quite sure why it does it, (i am only 14 but dont' let that fool you, i've been around horses all of my life)
Mainly how you clean your horses' sheath is this:
Make sure that the horse is comfortable with you touching him there. Have him tied and just see how he is, if he's alright with it, then it's time to move on. (If he doesn't like it then keep doing it till he doesn't care anymore) This IS kinda gross as you are touching his private part, (my gelding once got a you-know-what because I was making sure he was ok with it lol! XD)
Then you can go to your local Fleet Farm, (that 's waht we have in MN) or horsey store near you and buy some sheath cleaner, it has a green color. And buy a pair of rubber gloves for yourself.
Now its time to clean it. Take hose or some warm water(i'm sure ice cold might not feel very good) And put some of the cleaner into your palm and just start cleaning it. I'm attaching a link to youtube that teaches you more and shows you how.
And this one is about locating the "bean"
Hope I helped!