Combine first 6 ingredients and 1 teaspoon oil in a food processor, and process until smooth. With processor on, slowly add water through the food chute; process until smooth. Transfer mixture to a large bowl. Add bell pepper and onion, and set aside.
Combine remaining 1 teaspoon oil and squid; toss well. Sprinkle salt and black pepper over squid. Place squid on grill rack coated with cooking spray; grill 3 minutes or until done, turning once. Cut squid into thin strips; add to olive mixture, tossing to coat.