Scamming the squirrel is slang for trying to coerse the opposite sex's sexual reproductive organs to have sexual intercourse with your sexual reproductive organs.

Or, for more of a vulgar definition - trying to get some pussy.
Dialogue between 2 friends:

Joey: "Matt, you scamming the squirrel?"

Matt: "Oh yea, I'm negotiating the terms right now!"
by Cut Master October 21, 2007
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