Mountain bike disc brake noise can be really annoying. Luckily, it isn’t that hard to fix with just a few basic steps.
Find the Problem
The first step is to get a spray bottle of just plain water. Spray the water on the rotors, without getting any on the caliper/pads, and then ride it down the street and test the brakes. Did the noise go away? If it did, you most likely have an issue (contamination) with the pads/rotors or some glaze build-up. Disassemble the brakes, take some really fine-grit sandpaper, and do figure eights on a flat surface. You just want to rough up the pads a little, and clean any buildup on them. Next, get some brake cleaner, from the auto parts store (read the label to ensure it is OK for brake pads) and clean your rotors and spray the pads with the cleaner. Now I KNOW there is at least one person who will read this that will swear up and down that all kinds of bad stuff will happen and you may even go to hell for trying such a wicked and forbidden act, but I assure you I have done this on at least six occasions with great results every time. Your call. I know rubbing alcohol gets the nod most of the time, but it simply doesn’t work as good in my experience (if at all). You may have to lightly sand your rotors, as well, if you suspect glazing. I personally never have had to sand rotors, but I know many people do.
Water Didn’t Work
You say that when you sprayed the rotors with water, it still squealed? Very common. Most people start replacing parts at this point, but there is an easier solution. Take the pads off, and clean the pistons inside of the calipers, with a lint-free cloth moistened with that brake cleaner previously mentioned, and then clean the back of the pads as well. Most likely the noise is coming from where the pads contact the pistons.
I personally skip the second part of the above paragraph. Instead, I clean the pistons (as mentioned) and then sand off all of the paint on the back of the pads and take it down to the bare copper (or whatever). I then use a metal cleaner, such as Brasso, and I polish the pads. I had a really stubborn pair of pads, on my Formula Oro brakes, that this worked like a charm on. In an extreme case, you can put the thinnest layer of anti-brake squeal (from cars) on the back of the pads or even grease. I am talking THIN, and apply it with a razor blade. Anyone that has ever installed a CPU on a computer build will know exactly what I am talking about. Good luck!