That groove is part of the pad, and not a result of wear or damage. It is meant to help cool the pad and rotor, as well as provide a small path for accumulated brake dust to escape. Squealing brakes are usually caused by two things.
1) Seriously worn out pads, where the metal backing plate is contacting the rotor, or
2) The pads are vibrating inside the caliper during driving.
Since your pads look like they're in very good condition, I would say that you're suffering from the vibration issue. Buy some anti-squeal paste, and apply it between the backs of the pads and the caliper pistons. If you have the steel plate between the pad and pistons, put the paste on both sides of the steel plate. This should eliminate the squealing.

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