hmm id be inclined to say the indicator would be touching the rotor to say you pad is low, but you've already checked how much meat is on the pads. Are your rotors glazed? because it could be just the rotors are glazed with a smooth pad making a squealing noise, just take the pads out and scuff them up on concrete, and get some emery paper on your rotor, if that makes any difference, as its pretty cheap to do that, then maybe consider getting your rotors machined, or get one of those air biffer/grinder things on it, they come with little scuff pads and you can take the shinyness off the rotor.