Kristi,

Mel has a great suggestion in his new book. He says to take a piece of cardboard cut to the size of your square and place it over the top of your seeds. Lift the cardboard daily to water the square and remove the cardboard before the day that the seed packet says the seed will germinate (write the date on top of the cardboard).

I'm using brand new seeds this year, so my seeds are germinating quickly. 3 days in the Mel's Mix! I'm hoping I got all my spacing right, because my beans are going nuts already! :)

As for a mulch layer...I haven't made plans for one, so I'll be watching this thread with interest.

About the hay, as someone who has handled a lot of it over many years now, I would never recommend mulching anywhere you didn't want grass(and clover, and the many other things that usually accompany them) to grow. It's great for mulching to stop erosion, usually on places you want grass to grow, it's great for feed, but it's loaded with the seeds of everything that was in the field where it was cut. Those are probably the worst "pests" in hay, although there is also everything from bugs to mice, and if it wasn't harvested under ideal conditions and handled well it may also have its share of mold, mildew, etc.
All this is likely to be especially true of any hay being sold for/as much, chances are it has been recognized as not being suitable for feed already, and is more likely to have some bad qualities.

Some seeds require photoactivity (light) to germinate so I would make sure your seeds aren't of that type before covering them with cardboard pre-germination.

As for mulching, after the plants have developed several sets of true leaves I plan to cover them in shredded pine bark. It's more of a soil amendment then it is a mulch but it looks nice enough, and more importantly serves the purpose. A couple inches thick up to but not touching the stems of the plants you're growing.

In my perennial gardens I was given the tip of watering in the garden about "half-way" or so before putting the mulch on and then watering it the rest of the way through after you've applied it.

I find dried leaves work well and the cost is sure hard to beat

The best "mulch" for retaining moisture is an opaque silvered plastic sheet with a hole only large enough for the plant to come through. The silvering keeps the sun from evaporating all the water away; the drawback is that the soil is slower to warm up in the mornings, and watering the plant from above is not very effective, since the plastic sheet prevents water from going through everywhere but the one hole. It does prevent the establishment of any weeds though.

If plastic sheeting is not your preference, my personal favorite is super coarsely shredded coir (coconut husk fiber and pith); the local hardware store sells blocks of this compressed mulch, which can be reconstituted in water. This stuff absorbs and holds water like nothing else organic (depending on how coarse or fine it is, between 5 and 10 times its weight in water); the top may dry, but the rest of it will release water to the soil as needed and will definitely preserve the moisture of the soil. This stuff gets my recommendation.

I started the Square Foot Gardening method relatively recently, but instead of using peat moss (which is mined from bogs) I used coir, which is renewable, and not acidic (peat moss needs to be neutralized because it is somewhat acidic) and I am very pleased with the quality of the substitution.

Here is a link that might be useful: A link to an example of coarse coir mulch