From the pic.
You need to squat down between your legs, not on top of them.
2 tips, from Dan John:
1. Grab a pole. Squat down to rock bottom holding that pole. Squat in between your knees, not on top of them. This is the kind of position you are looking for.
2. Goblet squat. There are pictures of this around. Check them out. If you can't find them, then I can post one. When you squat down, your elbows should be in between your knees. Use them to slightly push your knees out. Rippetoe and Kilgore have a pic of this in Starting Strength too.