Is HTTP 1.0 being used nowadays

That's because Squid doesn't fully implement HTTP 1.1.

Looking around for Squid's HTTP/1.1 status leads to http://wiki.squid-cache.org/Features/HTTP11 and http://wiki.squid-cache.org/Http11Checklist ; the blog http://squidproxy.wordpress.com/ is also worth checking out. The squid3 roadmap mentions further HTTP/1.1 support for 3.2

Step 1: download and install URL Rewrite.
Step 2: add the following to your web.config file, to the <system.webServer> section:

<rewrite>
    <rules>
        <rule name="RequestBlockingRule1" patternSyntax="Wildcard" stopProcessing="true">
            <match url="*" />
            <conditions>
                <add input="{SERVER_PROTOCOL}" pattern="HTTP/1.0" />
            </conditions>
            <action type="AbortRequest" />
        </rule>
    </rules>
</rewrite>

This will refuse all HTTP 1.0 requests with a HTTP 504 error code.

Edit: after installing URL Rewrite, you can also configure rewrite rules in IIS Manager: