Then it would probably be just the same as a normal open topped transport, if it moves the passengers move etc.
I would see it getting locked in combat in the same way as any other monstrous creature of it's size would do, but I don't think that would stop the passengers shooting out at a valid target while the squiggoth fights in combat... the passengers aren't locked in combat and they're a different unit.
Its not explicitly mentioned anywhere but I don't see any rules that modify the normal conditions for shooting from a transport, so I would say they continue as normal.